12 vessels worth 20 billion yuan? CSSC will receive its first large-scale LNG carrier order

Following the acquisition of GTT certification, Cosco Shipping Heavy Industry's first large-scale LNG carrier order is about to be finalized, and it is expected to become the fourth Chinese shipyard to officially enter the large-scale LNG carrier construction market after Hudong-Zhonghua, Jiangnan Shipyard, and Dalian Shipbuilding Industry Company.

According to TradeWinds, Danish shipowner Celsius Tankers has signed a letter of intent with Cosco Shipping Heavy Industry (Jiangsu) for the construction of 4+8 180,000 cubic meter LNG carriers. The first vessel is expected to be delivered in 2025, with the rest delivered between 2026 and 2027. Each new vessel is priced at approximately US\$231 million, and the total price for all 12 vessels will reach US\$2.772 billion (approximately RMB 19.926 billion) if all optional orders are exercised.

This is Celsius Tankers' first collaboration with a Chinese shipyard. Since entering the LNG carrier market in 2018, all 13 of the company's 180,000 cubic meter LNG carriers have been built by Samsung Heavy Industries in South Korea. According to Celsius Tankers' goals, the company will expand its fleet size to 25 vessels and aims to own the most advanced and environmentally friendly fleet in the industry.

However, due to the fact that the delivery slots of the three major South Korean shipbuilders, including Mitsubishi Heavy Industries, are fully booked until 2026, it is difficult to meet Celsius Tankers' fleet expansion requirements. In order to accelerate its fleet expansion, Celsius Tankers has turned its attention to Chinese shipyards that can deliver ships faster.

Celsius Tankers initially announced in September of this year that it would order LNG carriers from Chinese shipyards. At that time, there were reports that Celsius Tankers was negotiating with Yangzijiang Shipbuilding and Cosco Shipping Heavy Industry. Sources revealed that due to price differences, Celsius Tankers seems to have terminated negotiations with Yangzijiang Shipbuilding for new shipbuilding projects.

Sources revealed that Yangzijiang Shipbuilding has always paid close attention to ship prices and costs and will not, in principle, accept orders that may lead to losses, even if it is a significant order such as the first LNG carrier. After all, as a private enterprise and a listed company, profitability is the most important thing.

For Cosco Shipping Heavy Industry, the Celsius Tankers order will be its first large-scale LNG carrier order, marking Cosco Shipping Heavy Industry's entry into the ranks of Hudong-Zhonghua, Jiangnan Shipyard, and Dalian Shipbuilding Industry Company, becoming the fourth Chinese shipyard to build full-size LNG carriers.

Previously, on October 10, Cosco Shipping Heavy Industry signed a patent cooperation agreement with the French engineering company GTT for the LNG MARK Ⅲ membrane containment system and obtained certification from GTT, obtaining a "pass" to enter the large-scale LNG carrier construction market. At that time, Cosco Shipping Heavy Industry revealed that it plans to sign orders as soon as the end of this year and build 175,000 cubic meter and 180,000 cubic meter LNG carriers.

Including Cosco Shipping Heavy Industry, there are currently only eight shipyards worldwide that have obtained GTT permission to build full-size LNG carriers, including three in South Korea and five in China. It is worth mentioning that, in addition to Hudong-Zhonghua, the other four Chinese shipyards—Jiangnan Shipyard, Dalian Shipbuilding Industry Company, Yangzijiang Shipbuilding, and Cosco Shipping Heavy Industry—have only recently obtained permission.

Cosco Shipping Heavy Industry's Haimen base has been laying the groundwork since 2014 and has invested a total of 350 million yuan in the new LNG carrier construction sector. Since June of this year, under the guidance and arrangement of the group's leadership, Cosco Shipping Heavy Industry's Haimen base has begun to focus on the large-scale LNG carrier sector. In September of this year, two types of LNG carriers jointly developed by the Haimen base and the group's internal design company, Deltmarin, obtained AIP certification from five classification societies: China Classification Society (CCS), Lloyd's Register (LR), American Bureau of Shipping (ABS), DNV, and Bureau Veritas (BV).

Since the beginning of this year, orders for LNG carriers have surged in the new shipbuilding market. Clarkson's data shows that the global order volume for new LNG carriers has reached 135 vessels, exceeding last year's 86 vessels and setting a historical record. The construction cost of 170,000 cubic meter large-scale LNG carriers has also risen, currently reaching US\$245 million (approximately RMB 1.751 billion).

Among them, Chinese shipbuilders have already received as many as 32 LNG carrier orders this year, far exceeding last year's total of 14 orders. Jiangnan Shipyard and Dalian Shipbuilding Industry Company received their first large-scale LNG carrier orders in the first half of this year, forming a new "three-legged" situation in the LNG carrier construction market with Hudong-Zhonghua, Jiangnan Shipyard, and Dalian Shipbuilding Industry Company, thus reversing the previous disadvantage.

With the number of shipyards in China capable of building large-scale LNG carriers increasing from one to five, the industry estimates that China's LNG carrier construction capacity will reach 30 vessels per year, and orders originally planned for South Korean shipyards may flow to Chinese shipbuilders. In the future, Chinese shipbuilders are expected to receive more LNG carrier orders, and the gap between China and South Korea will be significantly narrowed.