Even as global ship orders plunged this year, Korea's shipbuilding industry has continued selective bookings focused on high value-added vessels such as liquefied natural gas (LNG) carriers and ultra-large container ships. While shipbuilders may find it hard to meet the targets they set early this year, some say they held up well compared with the sharp drop in overall orders.
According to Clarksons Research, a U.K.-based shipbuilding and shipping market tracker, global orders from January to October this year totaled 37.89 million CGT (compensated gross tonnage), or 1,392 ships, down 43% from the same period a year earlier (66.49 million CGT).
Of that, Korean shipyards won 8.06 million CGT (183 ships), a 15% decline from a year earlier. During the same period, China's cumulative orders came to 22.39 million CGT (895 ships), down 52%.
China had more cumulative orders, but Korea focused on higher-priced large vessels. The average tonnage per ship won by Korean builders was 58,000 CGT, 2.6 times China's 22,000 CGT.
Large domestic shipbuilders are nearly full on docks (dock, shipbuilding facilities) with about three years of backlog and are selectively taking orders in preparation for the period after that. HD Korea Shipbuilding & Offshore Engineering has so far won a total of 95 ships worth $12.76 billion, achieving 71% of its annual target of $18.05 billion (about 26.2 trillion won). The company expects orders to continue steadily in the fourth quarter.
Samsung Heavy Industries has so far booked $6.4 billion (about 9.28 trillion won), achieving 65% of its annual order target of $9.8 billion (about 14.22 trillion won). The institutional sector merchant ship order target is $5.8 billion (about 8.41 trillion won), and $5.6 billion (about 8.12 trillion won) has been won so far.
The institutional sector offshore order target is $4 billion (about 5.8 trillion won), and so far $800 million (about 1.16 trillion won) in preliminary work has been secured. The plan is to reach the $4 billion target with orders for the Coral floating liquefied natural gas facility (FLNG) and the Delfin FLNG.
Hanwha Ocean, which does not disclose its annual order target, has won $6.32 billion (about 9.17 trillion won) this year. Its order backlog amounts to $31.7 billion (about 46 trillion won).
After its third-quarter earnings release, Hanwha Ocean said during a conference call that it expects stable growth in the fourth quarter, citing continued high-margin orders such as exports of special-purpose ships and LNG carriers.
Global LNG carrier orders decreased this year, but orders concentrated with Korean shipbuilders. This year's LNG carrier orders number 18, about a quarter of last year's total of 75. Korean shipbuilders swept all 18 ordered this year.
LNG carriers are considered high value-added vessels because they require cryogenic technology to transport natural gas in liquefied form at minus 162 degrees Celsius in cargo tanks. The price per ship rose from $189 million (about 274.4 billion won) in 2021 to $248 million (about 360 billion won) last month, improving profitability.
From next year, LNG projects are expected to pick up, led by the United States, with more than 100 new LNG carrier orders annually, according to some forecasts. In its annual review, French shipbroker BRS (Barry Rogliano Salles) said LNG demand will grow 5% a year through 2034 and that 241 LNG carriers will be needed to accommodate it.
A shipbuilding industry official said, "By building a portfolio centered on high value-added ship types such as LNG carriers and ultra-large container ships, concerns about a peak-out have eased," adding, "As projects such as Masgas align, shipbuilding is being reorganized as a strategic industry."