78 ships! Neck and neck! Chinese shipbuilders vie for dominance
2024-06-21 09:00
Qatar's "Hundred Ship Program" has once again ignited an order boom in the LNG carrier newbuilding market. New LNG carrier orders have doubled year-on-year this year, and newbuilding prices have hit a historical high. Chinese shipyards have secured nearly half of the orders in this vessel type this year, sharing the spotlight with South Korea for the first time.
Latest data from Veson Nautical, a maritime management solutions provider, shows that in the first five months of 2024, the number of new LNG carrier orders surged by 129% to 78 vessels, more than double the 34 vessels in the same period last year. Concurrently, the newbuilding price for 174,000 cubic meter LNG carriers increased to US$269 million, a 4.5% rise from US$257.6 million in the same period last year, and over 40% higher than the US$186.6 million three years ago, reaching a historical high.
Aside from rising steel and equipment prices, another significant reason for the surge in LNG carrier newbuilding prices is that Qatar has reserved a large number of LNG carrier berths for its "Hundred Ship Program," leading to quite limited available berths at major shipyards.
Furthermore, since the beginning of this year, the value of all types and ages of LNG carriers has risen across the board. The value of a 20-year-old 140,000 cubic meter large LNG carrier increased from US$62.85 million in January to US$72.40 million, an increase of approximately US$10 million, or about 15%.
This year's new LNG carrier orders are primarily concentrated in the large vessel segment, with 174,000 cubic meter LNG carriers accounting for approximately 74% of new orders, followed by 270,000 cubic meter Q-Max vessels, which account for about 23%. As of now, the orderbook for 174,000 cubic meter large LNG carriers has increased to 64% of the existing fleet.
The second phase of Qatar's "Hundred Ship Program" orders has been the primary driving force behind the significant increase in new LNG carrier orders this year. Among this year's new vessel orders, QatarEnergy's orders account for approximately 44%, another 13% are ordered by UAE shipping companies, and 9% by Chinese shipowners.
It is understood that Qatar's "Hundred Ship Program" is the largest LNG carrier newbuilding project in history. Since 2022, the "Hundred Ship Program" has ordered a total of 122 new vessels through two phases of orders.
Among these, the second phase of the "Hundred Ship Program" comprises a total of 62 orders. Besides the first batch of 17 LNG carrier orders for the second phase secured by HD Korea Shipbuilding & Offshore Engineering in October last year, the remaining 45 orders were all signed this year, including 15 vessels for Samsung Heavy Industries and 12 174,000 cubic meter LNG carriers for Hanwha Ocean (formerly Daewoo Shipbuilding), as well as a total of 18 of the world's largest Q-Max type 270,000 cubic meter LNG carriers for Hudong-Zhonghua Shipbuilding.
It is worth noting that in 2022, when a total of 66 orders from the first phase of the "Hundred Ship Program" became effective, the full-year new LNG carrier order volume reached an astonishing 183 vessels, setting an all-time record.
Aided by Qatar's orders, Chinese shipyards have significantly increased their share in the LNG carrier newbuilding market this year. Clarkson's data shows that year-to-date new LNG carrier orders total 58 vessels (11.53 million cubic meters), with Chinese shipyards securing 22 vessels (5.27 million cubic meters), accounting for approximately 46% of the market share; Korean shipyards secured 36 vessels (6.26 million cubic meters), accounting for approximately 54% of the market share.
In contrast, last year's full-year new LNG carrier orders totaled 66 vessels (11.30 million cubic meters), with Chinese shipyards securing only 14 vessels (approximately 2.30 million cubic meters), accounting for about 20% of the market share; Korean shipyards, however, secured as many as 51 vessels (9.00 million cubic meters), accounting for about 80% of the market share.
The French shipping brokerage Barry Rogliano Salles Group (BRS) pointed out in its Annual Review 2024 edition, released earlier this year, that in 2023, the Chinese shipbuilding industry ranked first globally in terms of orderbook volume for the three major vessel types: bulk carriers, oil tankers, and container ships, and was also in a leading position in other vessel segments. However, LNG carriers remain the only vessel market that Chinese shipyards have not yet topped, with Korean shipyards holding an orderbook of approximately 23 million deadweight tons in this segment, accounting for about 71% of the market share.
On the other hand, Veson Nautical noted that, unlike the heated performance of the newbuilding market, the current profitability of LNG carriers is stable but at a low level, which is common at this time of year. Although LNG spot rates increased by approximately 12% month-on-month, year-on-year earnings slightly decreased by about 1%.
Rebecca Galanopoulos Jones, Senior Content Analyst at Veson Nautical, emphasized that the demand for newbuilds in the LNG sector remains strong due to factors including the need for newer, greener vessels, geopolitical uncertainties, and an increase in LNG deliveries to European Union (EU) ports to replace Russian pipeline gas.
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