Securing the VLAC order! China's largest privately-owned shipbuilding company is full of momentum.

After receiving its first order for a Very Large Ethane Carrier (VLEC) in May this year, Yangzijiang Shipbuilding Group has achieved a new milestone in the field of liquefied gas carrier construction, becoming the first private shipyard in China to enter the Very Large Ammonia Carrier (VLAC) market.

4 vessels, 3.2 billion yuan! Nissen Kaiun orders VLACs from a Chinese shipyard for the first time.

According to foreign media reports, Japanese shipping giant Nissen Kaiun recently signed a contract with Yangzijiang Shipbuilding Group for the construction of 4 x 88,000 cubic meter VLACs. The new vessels will be delivered successively between 2028 and 2029, with each costing up to 110 million US dollars, bringing the total transaction value to approximately 440 million US dollars (about 3.201 billion RMB).

For reference, Clarkson's data shows that the price of an 88,000-93,000 cubic meter VLAC newbuilding has increased from 118 million US dollars at the beginning of the year to 122 million US dollars.

Shipbrokers say that since this is Yangzijiang Shipbuilding's first VLAC order, the shipyard offered a very competitive price.

These new vessels will adopt a design developed by the Marine Design & Research Institute of China (MARIC) and be equipped with Type A tanks. Nissen Kaiun has finalized a 7-year time charter agreement with energy trading company BGN International for these 4 new vessels.

It is understood that Nissen Kaiun, founded in 1889, is one of Japan's largest independent shipowners. Clarkson's data shows that Nissen Kaiun's current fleet operates 185 vessels with a total capacity of approximately 13.79 million deadweight tons, including 83 bulk carriers, 53 container ships, 28 oil tankers, 12 LPG carriers, 7 reefer ships, and 3 other vessels, with an average age of 5.6 years.

Nissen Kaiun has been active in the newbuilding market in recent years, with a total of 55 new vessels under construction, amounting to 2.64 million deadweight tons, most of which are being built in Japanese and Korean shipyards. This latest order marks the company's first VLAC order and its first order for a liquefied gas carrier from a Chinese shipyard.

As liquid ammonia is considered a feasible alternative to fossil fuels in the future energy supply chain, many international shipping companies have successively placed orders for VLACs since last year. Clarkson's data shows that since Singaporean shipping company Eastern Pacific Shipping placed its first order with Jiangnan Shipyard in May last year, the global VLAC order backlog has reached 53 vessels in just over a year. Especially this year, as of now, there have been as many as 32 new VLAC orders, while only 9 new VLGC orders were placed during the same period.

According to Clarkson's data, most of this year's new VLAC orders were undertaken by the three major Korean shipbuilders, totaling 26 vessels. The remaining 6 vessels were secured by Chinese shipbuilders, including 2 x 93,000 cubic meter VLACs ordered by AW Shipping, a joint venture between Middle Eastern shipowner ADNOC L&S and Wanhua Chemical, at Jiangnan Shipyard, and the 4 x 88,000 cubic meter VLACs secured by Yangzijiang Shipbuilding.

Yangzijiang Shipbuilding's first VLAC order to be built by Yangzi-Mitsui Shipbuilding.

For Yangzijiang Shipbuilding, the latest order marks the group's first entry into the VLAC construction market. This is another significant breakthrough for Yangzijiang Shipbuilding Group in the field of very large liquefied gas carrier construction, following its first order for a Very Large Ethane Carrier (VLEC) from Singapore's SP Chemicals in May this year.

With Nissen Kaiun's latest order, Yangzijiang Shipbuilding has become the first private shipyard in China to build VLACs. Previously, only Jiangnan Shipyard and Waigaoqiao Shipbuilding had experience in VLAC/VLGC construction in China.

Industry experts point out that, like LNG carriers, ammonia is transported in liquid form, liquefied at minus 33 degrees Celsius, with a dew point higher than LNG and hydrogen. Building ships capable of safely transporting large quantities of liquid ammonia requires both high technical capability and large production facilities, as well as high-level engineering management.

It is reported that these VLACs will be built at Yangzi-Mitsui Shipbuilding, a joint venture shipyard of Yangzijiang Shipbuilding. Yangzi-Mitsui Shipbuilding, strategically positioned for building high-end gas carriers, was established in 2019, jointly formed by Yangzijiang Shipbuilding, Mitsui & Co. and Mitsui E&S Shipbuilding of Japan. It integrates Yangzijiang Shipbuilding's flexible system and cost control capabilities, Mitsui E&S Shipbuilding's advanced R&D design, quality management, and after-sales service, and Mitsui & Co.'s strong global sales advantages.

According to data previously released by Yangzijiang Shipbuilding, as of May 24, Yangzi-Mitsui Shipbuilding held a total order value of 2.86 billion US dollars, of which liquefied gas carriers accounted for 40%, totaling 17 vessels, including 3 x 36,000 cubic meter LEG carriers, 3 x 25,000 cubic meter LPG carriers, 9 x 40,000 cubic meter LPG carriers, and 2 x 48,000 cubic meter LPG carriers.

It is understood that Yangzijiang Shipbuilding Group is the largest private shipyard in China, and the group has continuously deepened its presence in the liquefied gas carrier market in recent years. In 2022, Yangzijiang Shipbuilding obtained a patent cooperation agreement for GTT's LNG MARK III membrane containment system and secured its first batch of 2 x 175,000 cubic meter LNG carrier orders, becoming the fourth Chinese shipyard and the first private Chinese shipyard to enter the large-scale LNG carrier construction market.

Just last week, Yangzijiang Shipbuilding held the signing ceremony for the Yangzi Hongyuan Green High-Tech Clean Energy Vessel Manufacturing Base project, planning to invest approximately 3 billion RMB over the next two years to build a world-class demonstration zone for high-quality development of clean energy gas carriers. The project will utilize a coastline length of approximately 1320 meters and an area of about 1300 mu, constructing one 300,000-ton shipbuilding dock, one 200,000-ton outfitting quay, and one 100,000-ton harbor basin, with an annual production capacity of approximately 800,000 deadweight tons. It is expected to be completed and put into operation by the end of 2026, with an estimated annual output value of no less than 10 billion RMB after reaching full capacity.