Liquefied natural gas (LNG) dominates Korea’s newbuildings sector

The cleanest fossil fuel ramped up newbuilding orders in the republic

Korea appears to be heavily focused on reducing carbon emissions through taking on more LNG newbuilding orders. This came shortly after their plans on ammonia-powered vessels.

Preparing for an upward demand
LNG is touted as the cleanest fossil fuel and an excellent alternative to reduce greenhouse gas emissions and combat global warming. That led to Korea’s main 3 shipbuilders: Korea Shipbuilding & Offshore Engineering Company Limited (KSOE), Daewoo Shipbuilding & Marine Engineering Company Limited (DSME), and Samsung Heavy Industries Company Limited (SHI) recorded some US$44.5 billion worth of orders as at 5 December 2021. This doubled last year’s orders of US$21.1 billion. Shortly prior, the country was exploring ammonia-powered vessels which were required to be LNG compatible as well.

Amongst this whopping US$44.5 billion worth of orders, KSOE accounted for US$22.5 billion with 224 vessels, DSME’s secured orders were worth US$10.8 billion with 60 vessels, and SHI at US$11.2 billion for 75 vessels. All 3 essentially exceeded their order targets for this year. Industry observers anticipated the orders to continue flowing in due to the usual year-end peak order patterns.

Clarksons Research’s findings revealed mid-sized shipyard Daehan Shipbuilding Company Limited received orders for 412,000 compensated gross tonnage (CGT) as at end of October 2021 — up 116 per cent on year. Another mid-sized builder, Daesun Shipbuilding & Engineering Company Limited’s orders rose 114 per cent on year, and STX Offshore & Shipbuilding Company Limited clocked 275 per cent for the same period.

Choi Jin-myung, an analyst from NH Investment & Securities noted orders for boxships hiked by 5 times this year. He attributed this to a boom in the logistics sector. Choi added, “Korea dominated orders for LNG carriers, as companies have a technological advantage in surpassing annual targets.” A source from one builder cautioned that orders may slip in 2022, though it would not be as bad as previous years.

Korea recorded orders for 5.38 million CGT of LNG ships as at November 2021, translating to 90.9 per cent of global orders. For liquefied petroleum gas (LPG) carriers, Korean companies snagged 70 per cent of global orders. According to Clarksons Research’s earlier data, despite Korea’s leading position in LNG vessels, China is still the leading shipbuilder. In terms of numbers, China attained the biggest share of newbuilding orders: 48.7 per cent of global orders compared to Korea’s 37.7 per cent.

Marine Online Media Team
Please email us at marketing@marineonline.com to contact the author for this article.