As China’s shipbuilding industry has aggressively increased orders for liquefied natural gas (LNG) carriers since the start of the year, some analysts say the move is paradoxically serving as a lever that boosts Korean shipbuilders’ bargaining power on prices. As China’s major shipyards chew through large volumes of low-priced orders and exhaust construction slots for delivery even after 2029, the reasoning goes, Korea will enjoy a dominant position for upcoming orders of high value-added vessels.
According to the shipbuilding industry and the financial investment sector on the 13th, the three Korean shipbuilders—Samsung Heavy Industries, HD Korea Shipbuilding & Offshore Engineering, and Hanwha Ocean—dismissed concerns about a China-led supply glut during their recent earnings conference calls, instead interpreting it as an opportunity to raise vessel prices and improve profitability.
China’s Hudong-Zhonghua Shipbuilding and Jiangnan Shipyard each won orders for four LNG carriers last month from shipping company TMS Cardiff Gas and Shell, respectively. As Chinese yards kicked off an order-winning relay early in the year, touting price competitiveness about 10% cheaper than Korea, some in the industry voiced concerns that the LNG carrier stronghold where Korea excels could be eroded, pushing down prices and worsening profitability.
According to Clarksons Research, the ship new building price for a 174,000-cubic-meter LNG carrier peaked at $265 million in Feb. last year before turning downward, and has stayed at around $248 million for four consecutive months recently, showing a weak trend.
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