Hengli Heavy Industries, located in Changxingdao, Dalian, Liaoning province, China, won orders for 253 ships from the start of this year through July. The vessel types range from container ships to tankers, bulk carriers, and gas carriers (LPG and LNG). To handle the flood of work, it plans to recruit an additional 100,000 on-site workers in shipbuilding, engines, offshore plants, and equipment in the second half of this year, and hire more than 5,000 new employees.
Hengli Group, which has focused on textiles and petrochemicals, entered shipbuilding for the first time in 2022 by acquiring the STX Dalian shipyard asset, which had been idle for about 10 years. After fully starting up the shipyard the following year, in less than four years cumulative orders neared 550 ships, and the delivery schedule is booked through 2030.
As of June, 152 ships were already under construction after work began. Going further, it is investing about 13.5 billion yuan (about 2.83 trillion won) to expand ship block fabrication and outfitting facilities, and is also increasing space to build large vessels of at least 200,000 DWT simultaneously.
◇ Shipyards expand amid surging workloads
This scene is witnessed across Chinese shipyards. According to the shipbuilding industry on the 13th, Yangzijiang Shipbuilding, a major private Chinese shipbuilder, is building a new shipyard, "Yangzi Hongyuan," in Jiangsu province with a 300,000-DWT class dock (shipbuilding dock) as its construction schedule has filled beyond 2029. Even before opening, the shipyard, slated for completion this year, secured 10 container ships for delivery in 2028–2029. Another private shipbuilder, New Times Shipbuilding, also has an order backlog of 162 ships totaling 25.12 million DWT, filling its construction schedule through 2030, and is expanding new docks and smart production lines to boost capacity.
The piled-up orders are translating into a leap in results. In the first half of this year, Yangzijiang Shipbuilding's revenue was 17.5 billion yuan (about 3.68 trillion won) and net profit was 5.4 billion yuan (about 1.13 trillion won), up 36% and 28%, respectively, from a year earlier, both hitting a record high. The gross margin in the shipbuilding institutional sector was also a record high at 37.1%. Yangzijiang Shipbuilding said, "Construction increased for ships ordered at high prices in the past, and the share of highly profitable vessel types such as ultra-large LNG (liquefied natural gas) dual-fuel container ships and very large ethane carriers has grown."
Songfa, the parent company of Hengli Heavy Industries, expected first-half net profit this year to reach about 3.6 billion yuan (about 760 billion won), up 456% from a year earlier. It noted that ship starts and deliveries increased, the share of high-value-added tankers and container ships grew, and cost savings from in-house marine engine production and mass construction also expanded. Chinese shipbuilders that had built large volumes of low-priced ships are now raising profitability by increasing the share of high-priced, high-value-added vessels.
◇ Absorbing overseas orders even for high-value-added ships
China's shipbuilding industry, which bulked up through "favoring domestic orders," is now sucking in orders from global shipowners. In the first half of this year, new orders at Chinese shipbuilders totaled 121.06 million DWT, accounting for 82.3% of the world's orders. In the first quarter of this year, exports accounted for more than 96% of the ships built by Chinese shipyards. After accumulating mass-construction experience based on domestic shipowner orders and policy finance, they expanded their order scope from container ships and bulk carriers to tankers and eco-friendly ships.
LNG carriers, long led by Korea, are no exception. LNG carriers must transport liquefied natural gas at around minus 163 degrees Celsius, requiring advanced design and construction technology, making them a representative high-value-added vessel type. Korean shipbuilders have led the market since overtaking Japan in the late 1990s and currently hold about two-thirds of the global LNG carrier order backlog.
However, among at least 59 LNG carriers newly ordered in the first half of this year, Chinese shipyards won more than 40%. The volume was split between Hudong–Zhonghua Shipbuilding and Jiangnan Shipyard. When Hudong–Zhonghua delivered China's first domestically built large LNG carrier in 2008, construction took 36 months; it has recently cut that to 16 months. This year, it also began building the world's largest 271,000-cubic-meter LNG carriers ordered by QatarEnergy. With improved LNG carrier construction technology and productivity, Chinese shipyards are now winning major projects from global energy companies and overseas shipowners.
A shipbuilding industry official said, "In the first half of this year, China also took nearly 70% of the world's new orders for eco-friendly ships," adding, "The pace at which it is narrowing the technology gap and absorbing overseas shipowners' orders for high-value-added vessels is unprecedented, and a virtuous cycle is forming as profits from high-priced ships are reinvested in expanding manpower and production facilities, further strengthening order competitiveness."