Expectations are growing that the domestic shipbuilding industry will succeed in securing a large number of orders as forecasts suggest that liquefied natural gas  carrier orders could reach up to 150 vessels this year. The analysis indicates that orders will flock to domestic shipbuilders since LNG carriers are K-shipbuilding’s main vessel type and the docks of major competitor Chinese shipyards are at saturation capacity. Considering vessel prices, this represents a market worth up to 54 trillion won opening up.

According to UK maritime and shipping analysis institution Clarkson Research on Jan. 8, LNG carrier orders for this year are expected to reach 115 vessels. The forecast suggests that orders will increase as potential demand for LNG carriers grows due to the expansion of new LNG project development, combined with demand for replacing aging vessels.

French engineering company Gaztransport et Technigaz (GTT) presents an even more positive outlook. GTT Chairman Philippe Berterottière estimated that approximately 150 new LNG carriers would be needed to transport the volume produced from LNG projects approved through last year.

Last year, the LNG carrier market showed sluggish trends due to increased burden on shipowners from higher vessel prices and delays in final investment decisions (FID) for major LNG projects. Orders from the three domestic shipbuilding companies totaled only 31 vessels: HD Korea Shipbuilding & Offshore Engineering with 7 vessels, Hanwha Ocean with 13 vessels, and Samsung Heavy Industries with 11 vessels.

Domestic shipbuilders have been warming up since the second half of last year, announcing LNG carrier order wins. HD Korea Shipbuilding & Offshore Engineering secured orders for four 200,000 CBM-class LNG carriers worth 1.4993 trillion won on Jan. 6. The order contract also includes option contracts for four additional vessels, raising possibilities for further orders.

Hanwha Ocean hit the jackpot last month by securing orders for seven LNG carriers worth 2.5891 trillion won, raising expectations for this year’s orders. In the same month, Samsung Heavy Industries also secured orders for two LNG carriers worth 721.1 billion won.

However, as final investment decisions for major LNG projects centered on the United States are being confirmed one after another, forecasts suggest that LNG carrier orders will expand starting this year. Considering that the price of 174,000 CBM-class LNG carriers was around $250 million last year, this year’s LNG carrier order volume is estimated to reach up to $37.5 billion.

According to Daol Investment & Securities, the scale of LNG projects scheduled to operate in 2029 is approximately 56.5 million tons per annum (56.5 MPTA). Considering that typically two LNG carriers are deployed per 1 MTPA of new projects, the calculation shows that 110 vessels would be needed.

Choi Kwang-sik, a researcher at Daol Investment & Securities, said, “Only 21 LNG carriers have been ordered targeting 2029, so around 90 newbuilding orders are needed,” and predicted 100 vessel orders considering demand for replacing aging ships. He also anticipated that these vessel orders would be placed within this year, considering that ship construction typically requires three years.

Since LNG carriers require high technology and are considered K-shipbuilding’s main vessel type, expectations are high that most of this year’s ordered vessels will directly translate into order performance for domestic shipbuilders.

Han Seung-han, a researcher at SK Securities, said, “Over 100 newbuilding orders for LNG carriers are forecast this year,” adding, “Considering that Hudong-Zhonghua Shipbuilding, the only Chinese shipyard with a proper LNG carrier track record, has limited delivery slots, most of the volume will be secured by the three domestic shipbuilders.”

Kim Hyun-seok, a researcher at iM Securities, said, “China is still only recording order performance for LNG projects involving Chinese capital, and there are no movements by global shipping companies to place orders in China,” adding, “US Trade Representative (USTR) sanctions against China are also playing a role, so Korean LNG dominance will be maintained for the time being.”

Source:Business Korea