The demand for LNG ships has surged, South Korean shipyards are full of orders, and China has also grabbed many orders.
(Schematic, Bloomberg)
[Financial Channel/Comprehensive Report] Due to the destruction of the Beixi pipeline, many natural gas has been transported by sea, resulting in a surge in global demand for LNG carriers. In 2022, the global order for new LNG carriers is 163, a 12-year high.
South Korea, the market leader, is full of orders, and it is difficult to swallow them all. China has actively launched a campaign to grab orders. The cost of a ship is 20-30 million US dollars (approximately NT$610-910 million) cheaper than South Korea, and it has successfully won 57 orders.
According to the "Financial Times" report, Refinitiv data shows that global LNG ship orders will reach 163 in 2022, an increase of more than 2 times from 2011, which is also the highest level since 2011. Most of the LNG ship orders are expected to be delivered by the end of 2026.
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This wave of new orders for LNG ships has benefited the most from South Korean shipyards, which have received a total of 105 orders. The shipbuilding capacity of South Korean manufacturers will be fully loaded in the next three years.
Ka Sam-hyun, CEO of Korea Shipbuilding and Offshore Engineering Company, the world's largest shipyard and a subsidiary of Hyundai Heavy Industries, said that in the next 2 to 3 years, the demand for new LNG ships will maintain a growth trend, and more than 50 new LNG ships may be added every year.
He expects the company to turn a profit in 2023 after two years of losses.
Since it is difficult for South Korea to take all the orders, China has the opportunity to grab a big order.
According to Refinitiv data, China's LNG ship orders surged to 57 in 2022, a sharp increase from 11 in 2021.
Not only that, but the construction cost in China is relatively cheap. According to Kaushal Ramesh, head of LNG analysis at Rystad Energy, the construction cost of LNG ships in China may be 20 million to 30 million US dollars cheaper than that in South Korea.
South Korea's Daewoo Shipyard also confirmed that some customers appear to be placing orders with Chinese shipyards as they want early deliveries of LNG carriers as our order books are almost full.
Although LNG orders are booming, rising costs have become a hidden concern. Industry insiders warn that rising steel prices and labor shortages will affect shipyards’ profits. It is estimated that the average cost of LNG salaried ships will increase from US$200 million in 2021 to US$250 million in 2022 .
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