Chinese shipbuilders regain the top spot! Intense competition in shipbuilding orders between China and South Korea

2023-04-07 09:00

In the March order battle, Chinese shipbuilders regained the top spot. However, thanks to their strong performance in the LNG carrier sector, South Korean shipbuilders still ranked first in cumulative order volume for the first quarter of the year.

According to data released by Clarkson on April 5, global new ship order volume in March reached 79 vessels totaling 2.43 million CGT. China secured 43 vessels totaling 0.95 million CGT, ranking first with a 39% market share; South Korea secured 15 vessels totaling 0.8 million CGT, ranking second with a 33% market share. This marks the second time this year that China has topped the monthly order list, following its January victory.

However, looking at the cumulative order data for the first quarter, South Korea secured 65 vessels totaling 3.12 million CGT, maintaining its first place ranking with a 44% market share; China secured 110 vessels totaling 2.59 million CGT, ranking second with a 37% market share. Although China led South Korea by 45 vessels in terms of number of vessels, South Korea led China by 0.53 million CGT in terms of CGT, mainly due to orders for large liquefied gas carriers and container ships.

The South Korean shipbuilding industry stated that the order performance of South Korean shipbuilders has continued to show a positive trend since the beginning of the year. In the first quarter, the three major shipbuilders' total order value reached approximately 13.82 trillion won (approximately US\$10.5 billion), representing approximately 33% of their annual order target of US\$32.2 billion. Among them, HD Hyundai Heavy Industries' three shipbuilding subsidiaries—Hyundai Heavy Industries, Hyundai Mipo Dockyard, and Hyundai Samho Heavy Industries—achieved a combined order value of US\$7.28 billion, reaching 46.3% of their annual order target of US\$15.74 billion; Samsung Heavy Industries secured four large LNG carriers and one floating liquefied natural gas unit (FLNG), with a cumulative order value of US\$2.55 billion, reaching 26.9% of its annual order target of US\$9.5 billion; Daewoo Shipbuilding secured four new ship orders with a total contract value of approximately US\$800 million, completing 11.5% of its annual order target of US\$6.98 billion.

Since the beginning of the year, the order competition between Chinese and South Korean shipbuilders has been intense, with both countries alternately taking the lead. According to data released by Clarkson, in January, Chinese shipbuilders ranked first globally with a 57% market share; in February, South Korean shipbuilders took a significant lead with a 77.6% market share, while Chinese shipbuilders ranked third with an 8.46% market share.

The South Korean shipbuilding industry stated that due to the impact of the global economic downturn, the global new shipbuilding market is gradually cooling down, and new ship order volume will show a continuous downward trend, and the order competition between China and South Korea will become increasingly fierce. In response to this situation, the strategy of South Korean shipbuilders is to continuously secure orders, focusing on high value-added ship types such as LNG carriers, where market conditions are improving, in order to expand market share.

According to International Ship Network, a total of 19 large LNG carrier orders were placed globally in the first quarter of this year, with South Korean shipbuilders securing 17, accounting for 89.47% of the market share. Among them, HD Hyundai Heavy Industries secured 10, Samsung Heavy Industries secured 4, and Daewoo Shipbuilding secured 3. The remaining two were secured by Hyundai Heavy Industries Co., Ltd.

As of the end of March this year, the global backlog of orders totaled 110.35 million CGT, a month-on-month decrease of 0.24 million CGT. Among them, China accounted for 48.67 million CGT, ranking first with a 44% market share; South Korea accounted for 38.68 million CGT, ranking second with a 35% market share. Compared with the end of February, South Korea increased by 0.17 million CGT, and its market share increased by 0.4%, while China decreased by 0.59 million CGT, and its market share decreased by 1%.

In March this year, the Clarkson newbuilding price index was 165.56 points, up 9.39 points year-on-year. By ship type, a 174,000 cubic meter LNG carrier was US\$254 million, a very large crude carrier (VLCC) was US\$120 million, and an ultra-large container ship was US\$215 million.

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