51 vessels! South Korean shipbuilders continue to dominate the LNG carrier market

Year-to-date, South Korea's three major shipbuilders have secured all LNG carrier orders from overseas ship owners, reaching a total of 51 vessels, exceeding 50 for two consecutive years. Continuing last year's success, the South Korean shipbuilding industry continues to dominate the LNG carrier market this year.

According to South Korean media reports, Shell and Hyundai Heavy Industries signed a letter of intent in October for up to eight LNG carriers. Hyundai Heavy Industries has not yet disclosed details such as vessel specifications, price, and delivery time. However, it is reported that the 174,000 cubic meter LNG carriers built by the three major South Korean shipbuilders cost approximately $190 million each, and this order is expected to be worth $1.52 billion.

It is reported that these eight LNG carriers may be used to meet the transportation needs of Shell's LNG Canada project, which will start production in 2023 with an annual capacity of 28 million tons, as well as to update its fleet. Currently, Shell has been negotiating new ship construction with ship owners.

Including letters of intent, Hyundai Heavy Industries Group has received orders for 24 LNG carriers this year, Samsung Heavy Industries for 18, and Daewoo Shipbuilding & Marine Engineering for 9. The three major South Korean shipbuilders have a combined total of 51 LNG carrier orders. This year's order intake is faster than last year; last year's total LNG carrier orders reached 66, but the three major South Korean shipbuilders only surpassed 50 LNG carrier orders in December.

South Korea's three major shipbuilders have an absolute advantage in the LNG carrier sector, which is considered a high value-added vessel. Clarkson's data shows that as of now, the total number of new LNG carrier orders globally is 35, with 32 secured by South Korean shipbuilders.

Of the remaining three, one was received by the Russian Zvezda Shipbuilding Complex, which has signed a technology agreement with Samsung Heavy Industries for the construction of the relevant LNG carrier. Some industry insiders believe that Russian shipbuilders, lacking sufficient technical capabilities, may entrust the construction of LNG carriers entirely to Samsung Heavy Industries. The other two were ordered by CSSC Leasing from Hudong-Zhonghua Shipbuilding. Considering that the LNG carrier orders received by Chinese and Russian shipbuilders were all placed by domestic ship owners, South Korean shipbuilders have actually received all LNG carrier orders from overseas ship owners this year.

However, although South Korean shipbuilders have won the vast majority of LNG carrier orders, South Korean shipbuilding industry insiders are still concerned that the three major shipbuilders may find it difficult to achieve their order intake targets for this year. Due to the global economic downturn and the impact of the US-China trade dispute, the global order volume for new ships has decreased compared to last year. The cumulative order volume for new ships in the third quarter totaled 15.39 million CGT, nearly half that of the 26.96 million CGT in the same period last year.

       It is worth mentioning that in the first three quarters of this year, Hyundai Heavy Industries Group's order intake was only $7.3 billion, a year-on-year decrease of 33%, only 41% of its annual target of $17.8 billion. Daewoo Shipbuilding & Marine Engineering's order intake in the first three quarters was $3 billion, a year-on-year decrease of 35%, only 34% of its annual target of $8.37 billion; Samsung Heavy Industries' order intake in the first three quarters was $4.2 billion, down 11%, 54% of its annual target of $7.8 billion.

Therefore, South Korea's three major shipbuilders are pinning their hopes on the large LNG carrier projects from Qatar and Mozambique, which are expected to be finalized by the end of this year. Qatar Petroleum issued a tender in April this year, initially planning to build 60 LNG carriers to support planned capacity expansion; over the next 10 years, Qatar's LNG carrier construction projects are expected to exceed 100 vessels. According to International Ship Network, the first batch of 40 LNG carrier orders from Qatar is expected to be placed this year, and South Korea's three major shipbuilders are basically certain to secure Qatar's orders. It is reported that the Qatari government has asked the three major South Korean shipbuilders to provide quotations for the delivery of 40 LNG carriers (10 per year) between 2023 and 2026.

On the other hand, Mozambique's LNG project is also expected to proceed as planned. ExxonMobil's LNG project in Mozambique has been delayed, but TotalEnergies' Anadarko LNG project has recently issued tenders for up to 16 LNG carriers. Industry insiders believe that South Korea's three major shipbuilders, with their abundant technical skills and experience in LNG carrier construction, are likely to win the orders.