Skip to content
  • KOSPI 2746.63 +0.81 +0.03%
  • KOSDAQ 905.50 -4.55 -0.50%
  • KOSPI200 374.63 +1.41 +0.38%
  • USD/KRW 1348 -3 -0.22%
  • JPY100/KRW 890.27 -2.16 -0.24%
  • EUR/KRW 1452.54 -4.99 -0.34%
  • CNH/KRW 185.78 -0.25 -0.13%
View Market Snapshot
Shipping & Shipbuilding

Korean shipbuilders win record LNG carrier orders; 2022 outlook bright

Analysts say tighter environmental regulations will raise replacement orders, a positive for shipbuilders

By Dec 08, 2021 (Gmt+09:00)

2 Min read

An LNG carrier built by Samsung Heavy Industries
An LNG carrier built by Samsung Heavy Industries

South Korea’s three major shipbuilders have swept global orders for LNG carriers, more profitable than oil tankers and container ships, amid signs of a global economic recovery from the pandemic.

The 2022 outlook for the Big Three – Korea Shipbuilding & Offshore Engineering Co. (KSOE), Daewoo Shipbuilding & Marine Engineering Co. and Samsung Heavy Industries Co. – is brighter on the growing demand for eco-friendly vessels and new orders to replace aging ships, analysts say.

According to the shipbuilding industry on Wednesday, the three shipbuilders have won a combined 64 large-size LNG carriers (140,000 cubic meters and above) so far this year.

The figure is higher than the previous annual record orders of 58 ships in 2018.

According to global market researcher Clarkson Research Service, a total of 63 LNG vessels had been ordered globally as of the end of November from the start of the year, meaning Korean shipbuilders won almost all LNG ship orders placed from around the world.

Industry watchers said the Korean shipbuilders have received 14 new LNG carrier orders since November, mostly from shipowners in Greece.

Ship operators have increased their new vessel orders to meet rising seaborne transportation demand, boosting freight rates and new shipbuilding prices.

Hyundai Heavy shipbuilding dockyard
Hyundai Heavy shipbuilding dockyard

The daily spot freight rate for a 160,000-cubic-meter LNG carrier has risen about 50% to $210,000 year to date, according to industry data.

The newbuilding price for the benchmark 174,000-cubic-meter LNG ship surpassed $200 million a vessel in September, the highest in six years, and is currently hovering around $206 million.

Shipbuilding prices are expected to continue their upward trend, keeping Korean shipyards busy in coming years.

An official at a local shipbuilder said most Korean companies’ dockyard space has already been booked at least until the first half of 2024, with shipping companies competing to secure slots on the docks for their new ships.

REPLACEMENT ORDERS SET TO RISE

Stricter environment regulations are also creating new and replacement demand for eco-friendly ships that reduce carbon emissions, which are pricier than conventional vessels, analysts say.

Daewoo Shipbuilding's ice-breaking LNG carrier
Daewoo Shipbuilding's ice-breaking LNG carrier

With major economies around the world attempting to cut emissions to meet net-zero targets, the shipping sector has been looking for ways to cut the environmental footprint of its operations.

The International Maritime Organization (IMO), a UN maritime safety agency, requires its member states to cut carbon emissions from ships by 30% of their 2008 levels by 2025 and raise the target to 70% by 2050.

In June, the IMO also introduced the Carbon Intensity Indicator (CII), under which its member countries are required to lower their carbon emissions from ships by 2% every year from 2024 to 2016 compared to the 2019 levels.

According to Clarkson, about two-thirds of the 600 large-size LNG carriers operating around the world are either ships with steam turbine engines or dual fuel diesel electric (DFDE) ships that require drastic system upgrades to slash carbon emissions or should be replaced with new ships.

“Even if shipowners cut their new orders next year compared with this year’s orders, the global LNG carrier market will see a supply shortage,” said an industry official.

Write to Jung-hwan Hwang at jung@hankyung.com
In-Soo Nam edited this article.
More to Read
Comment 0
0/300