As high-value ships such as liquefied natural gas (LNG) carriers saw a sharp decline in orders, predictions are emerging that competition may intensify again a few years later as the order backlog in China's shipbuilding industry shrinks. The domestic shipbuilding industry has secured all its workload until 2027, but work is not expected to increase rapidly after 2028.
According to the shipbuilding industry on the 27th, the expected delivery volume for China's shipbuilding industry in 2028 is 17.03 million CGT (compensated tonnage considering the difficulty of shipbuilding), which is 63% of the previous year's 27.18 million CGT. The expected delivery volume for the domestic shipbuilding industry in 2028 is 5.42 million CGT, which is 47% of the previous year's volume.
Both Korea and China are in a situation where they cannot fill their workloads for 2028, and ship orders are declining sharply. According to Clarkson Research, the global ship order volume until May this year was 15.92 million CGT, down 45% compared to the same period last year, which saw an order volume of 29.18 million CGT.
In particular, orders for LNG carriers and liquefied petroleum gas (LPG) carriers have decreased significantly. The order volume for LNG carriers from January to May this year was 670,000 CGT, down 88% compared to the same period last year, and the order volume for LPG carriers also dropped to 500,000 CGT, a 76% decrease during the same period.
The reason for the decrease in order volume appears to be that the deliveries of ships ordered during the COVID-19 pandemic have recently occurred, and the ship new building price remains high. Earlier this month, the Clarkson newbuilding price index was at 187.23, which is similar to the historical peak of 191.6 in 2008. The newbuilding price index has been steadily increasing since recording 125 in December 2020. In the industry, there are projections that if this trend continues, the annual order volume this year will not even reach half of last year's level.
In recent years, China's shipbuilding industry has significantly increased its production capacity, and if competition for orders arises due to a lack of work, the revenue of the domestic shipbuilding industry may deteriorate. China's annual new ship delivery volume increased by 47% from 14.90 million CGT in 2021 to 21.88 million CGT last year. Korea saw a 9% increase during the same period, while Japan experienced a 10% decrease.
Lee Eun-chang, a researcher at the Korea Institute for Industrial Economics & Trade (KIET), noted, "China is securing a very large volume by either building new shipyards or expanding existing ones. If China exhausts all the volume it currently holds, an oversupply (of shipyard production capacity) may occur."