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LNG carriers ’46 vs 5 ‘
Chosun No. 1, almost lost to China
Shipping companies saw ‘one year delay in delivery to China’
“Gobu-do is still Korea”
A contract worth 12.5 billion won at the end of the year alone
The environment in the shipbuilding industry in the first half of this year was bleak. In the wake of the new coronavirus infection (Corona 19), global ship orders fell to a record low. It was less than during the financial crisis of 1997 and the global financial crisis of 2008. There were also concerns that the shipbuilding ecosystem would collapse as the joblessness at the shipbuilding dock became a reality.
However, the national shipbuilding ‘Big 3’ managed to reverse after winning orders since last November. It beat China and Japan by sweeping away not only the liquefied natural gas (LNG) carriers that dominate the world market, but also the ultra-large crude oil carrier (VLCC). It is an analysis that shows that the technology gap with China is still large in the high value-added naval market.
Hyundai Heavy hits 91% order target
According to the shipbuilding industry on the 27th, Hyundai Heavy Industries Group, Daewoo Shipbuilding & Marine Engineering and Samsung Heavy Industries achieved 91%, 75% and 65% respectively. Compared to 82%, 82% and 91% last year, it is not significantly reduced.
Hyundai Heavy Industries Group adjusted its target for this year’s order in October from $ 15.7 billion to $ 11 billion, but considering the aftermath of Corona 19, the industry is assessing the results to be good. In particular, Samsung Heavy Industries was able to secure orders worth $ 4.4 billion (about 4.9 trillion won) in one month, raising the goal of getting orders this year from 15% to 65%.
The power of the three Joseon companies is revealed in the content of the order. High value-added ships such as LNG carriers and VLCC were led. According to Clarkson Research and Industry, a global shipbuilding and shipping research organization, there are a total of 63 LNG carriers ordered worldwide this year. Among them, Hyundai Heavy Industries Group, Samsung Heavy Industries and Daewoo Shipbuilding & Marine Engineering received 21, 19 and 6 orders, respectively, representing 73% from three national shipbuilders. China only won orders for 5 vessels. Japan has not won a single order.
LNG carriers are expensive ships priced at $ 186 million (about 205 billion won) per ship. Although profitability is high, the national shipbuilding industry is evaluated as a market with unmatched competitiveness due to the need for high-tech construction.
This year’s delayed construction of the LNG-powered super-large container ships ordered by CMA CGM from China for more than a year further undermined the confidence of global shipowners in Chinese LNG carriers. In 2018, an accident occurred when the Gladstone LNG carrier, built by Hudong China, stopped due to an engine failure. An official from the shipbuilding industry explained: “Due to the nature of LNG transactions that contract large quantities as futures, shipowners consider the stability of the ships as their top priority.”
VLCC has also become a “filial son”. VLCC is classified as a high value-added ship along with LNG carriers priced at $ 85 million (about 93 billion won) per ship. This year a total of 42 VLCCs were ordered worldwide, with Hyundai Heavy Industries Group and Daewoo Shipbuilding & Marine Engineering receiving 27 and 7 orders, respectively. Korea’s share reached 81%. China obtained orders for 5 vessels and Japan for 1 vessel.
It is also good news that the demand for VLCCs equipped with LNG propulsion engines, which Korean companies have a big advantage over instead of bunker C fuel, is increasing due to the strengthening of the environmental regulations of the International Maritime Organization (IMO). of this year. Since about 20% of the VLCCs currently in operation are older ships that are over 15 years old, the demand for replacement is also increasing. Daewoo Shipbuilding & Marine Engineering recently signed a letter of intent (LOI) to build 10 LNG dual fuel VLCCs with European shipowners, predicting an order worth 1 trillion KRW.
Container ship orders are also coming in
The container ship market is also heating up after a long time. With the Shanghai Container Freight Index (SCFI) breaking a record for 9 consecutive weeks, orders for large container ships continue to resume due to the boom in shipping. For container ships with more than 12,000 TEU (1 TEU = 1 6m container) this year, Korea won 18 orders, ahead of China (14). It is analyzed that the market for small and medium containerships is virtually dominated by China, but global shipping companies are increasing orders mainly for ultra-large containerships, which is an advantage for Korea.
According to industry sources, Hyundai Heavy Industries and Samsung Heavy Industries recently signed a letter of intent to build a 13,000 TEU class container ship with Capital Product Partners, a Greek shipping company. The order size is 10 ships, including 5 ships for each company and 5 ships for options. The 13,000 TEU container ship is expected to win a 1 trillion won contract for both companies at about 100 billion won per ship.
The industry predicts that around 100 large container ships will be placed around the world in the first half of next year. An official from the shipbuilding industry said: “Unlike last year, which relied solely on LNG carriers, orders for container ships and tankers are also increasing.” “Orders will continue until the first half of next year.”
