Of the 16 liquefied natural gas (LNG) carriers ordered worldwide this year, Korean shipbuilders won 14. Chinese shipbuilders did not win a single vessel. After racking up large orders for LNG carriers, which require higher technical skills following relatively easier-to-build container ships and bulk carriers (ships that carry unpackaged bulk cargo such as grain and coal), China had been closing in on Korea, but frequent breakdowns and U.S. sanctions appear to be slowing that momentum.
According to the Korea Offshore & Shipbuilding Association on the 29th, a total of 16 LNG carriers were ordered worldwide through last month, and Korean shipyards won 14 of them (88%). By shipbuilder, Samsung Heavy Industries took 7, HD Hyundai Samho 5, and Hanwha Ocean 2. The remaining 2 (12%) went to the United States, and that work will be handled by the Philly Shipyard that Hanwha acquired last year. The orders were placed by Hanwha Ocean’s subsidiary Hanwha Shipping.
Until now, the newbuild LNG carrier market has been split between Korea and China. In 2022, the market share for LNG carrier newbuilds was 67.5% (115 vessels) for Korea and 32.5% (56 vessels) for China. Last year the gap narrowed to 57.2% (48 vessels) for Korea and 42.8% (28 vessels) for China. China’s Hudong-Zhonghua Shipbuilding won 24 LNG carrier orders last year, the most in the world.
The industry believes China’s LNG carrier orders have dried up as the United States Trade Representative (USTR) imposed port-entry restrictions and orders from Qatar entered a lull. Starting on the 14th of next month, the USTR will impose a fee of $50 per net tonnage (a measure of the volume actually used to carry cargo or passengers) when a Chinese shipping company or a shipping company operating a Chinese vessel enters the United States.
The fee will be raised gradually to $140 per ton by 2028. Even if a vessel is operated by corporations from countries other than China, if it was built in China it must pay $18 per ton, which will also rise to $33.
China secured a large share of orders by building ultra-large 270,000-cubic-meter (Qatar-Chinamax) class vessels to meet the demands of Qatari shipowners who needed massive ships. Orders for the Qatar LNG project entered a lull after the second round of orders was completed last year.
The industry also believes frequent breakdowns of Chinese vessels likely had an impact. The LNG carrier CESI Qingdao, built by Hudong-Zhonghua Shipbuilding, was unable to depart from an Australian LNG terminal in 2023 due to a generator failure, delaying the loading schedule. In 2018, an abnormality was found in the propulsion system of a vessel in operation, and it had to be towed near Papua New Guinea.
Lee Eun-chang, a research fellow at the Korea Institute for Industrial Economics & Trade (KIET), said, “In a situation where the (newbuild) market is in a lull, for China to increase its market share, it must be evaluated as having no difference in quality from Korean ships,” adding, “To receive that evaluation, Chinese-built vessels must operate stably for years, so Korea’s shipbuilding industry still has time to widen the gap.”
Source: CHOSUNBIZ
