Hanwha Ocean, one of South Korea’s three major shipbuilding giants, anticipates sustained strong demand for LNG carriers and very large ethane carriers (VLECs) amid market recovery.
Newbuilding market recovery driven by multiple factors
Recently, Hanwha Ocean released its second-quarter earnings report. The company stated that the LNG carrier newbuilding market is experiencing a revival, propelled by growth in U.S. export projects, the gradual phase-out of steam turbine vessels from the global LNG fleet, and declining shipyard prices.
This shipbuilder under Hanwha Group believes that rising LNG charter rates in the second half of this year will also positively impact future newbuilding orders. Additionally, the company hopes that the implementation of relevant U.S. policies will make vessels built in South Korea more attractive.
This month, Hanwha Ocean’s U.S. shipping subsidiary—Hanwha Shipping—took a groundbreaking step by placing an order for 1+1 LNG carriers at Hanwha Philly Shipyard.
Hanwha Group-affiliated companies collectively hold a 22.7% stake in U.S. LNG project developer NextDecade, with Hanwha Ocean owning 6.8%. The company expects that NextDecade’s four additional production lines (the first three already under construction) will require up to 20 LNG carriers.
The company also noted that VLEC demand will be supported by new ethane cracking projects in Asia.
Hanwha Ocean remains optimistic about very large crude carrier (VLCC) demand, predicting increased fleet renewal needs—current VLCC orders stand at only 104 vessels, representing 11.4% of the global fleet.
However, the company stated that after two years of record newbuilding activity, the very large gas carrier (VLGC) newbuilding market may slow down, emphasizing that very large ammonia/LPG project development has been “limited” so far.
The company expects demand for ultra-large container vessels to remain stable, while the mid-sized vessel segment below 10,000 TEU will see “selective recovery.” This aligns with the recent surge in feeder container ship orders.
Return to profitability, but below expectations
Hanwha Ocean reported a second-quarter net profit of nearly KRW 149 billion (approximately $107.1 million), turning around from a KRW 27 billion loss in the same period of 2024.
Sales increased by 30% from KRW 2.536 trillion to KRW 3.294 trillion. Commercial vessels dominated sales at KRW 2.807 trillion, up 33% from KRW 2.112 trillion year-on-year.
Hanwha Ocean explained that the sales growth was driven by seasonal factors increasing working days and a higher proportion of high-margin LNG carrier sales.
Operating profit also saw significant growth due to reduced “low-margin” container ship orders and new vessel deliveries, coupled with the “rapid expansion” of “high-margin” LNG carrier projects.
Sales in its naval vessel business declined due to submarine project completions, but the company expects stable margins through new projects, maintenance work, and U.S. operations.
Offshore operations improved slightly with the completion of a drillship project. The company anticipates a slight quarterly sales dip due to new project delays but maintains stable full-year profitability.
Although Hanwha Ocean’s second-quarter performance exceeded operating profit expectations (KRW 254.74 billion forecast vs. KRW 371.7 billion actual), net profit fell short of the KRW 195.6 billion projection.
Industry analysts note that Hanwha Ocean’s $3.3 billion new orders as of April 2025 lag behind competitors like HD KSOE ($9 billion), raising concerns about its long-term growth potential.
As of June this year, Hanwha Ocean’s order backlog stood at 132 vessels. This includes 109 commercial vessels: 65 LNG carriers, 18 container ships, 16 tankers, and 10 ammonia/LPG carriers, along with 4 offshore units and 19 naval vessels and other ships.
