Chinese shipbuilders have penetrated the South Korean LNG carrier shipbuilding market this year, capturing nearly 40 percent of all new orders for large liquefied natural gas (LNG) carriers globally. While China leads in the overall commercial ship market, including container ships and bulk carriers, LNG carriers with a capacity of 174,000 cubic meters or more are traditionally dominated by South Korean shipbuilders.
Development of LNG Ship Production Capacity in China
According to a report by Clarkson Research, as of the third quarter of this year, South Korea ranks first with 173 orders, while China is in second place with 71 orders. However, this year, a clear trend is observed as China rapidly strengthens its LNG carrier production capacity and quickly closes the gap. While the shipbuilding industry emphasizes that LNG carriers, which remain more profitable, are still being ordered from South Korean builders, concerns are rising about the possibility of China overtaking.
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Technology and Quality at the Forefront of Competition
LNG carriers are designed to transport liquefied gas at temperatures of minus 163 degrees Celsius, making cargo containment technology in these ships crucial. Key aspects include ensuring no gas leakage and regasification of the liquefied gas. While the French company GTT holds nearly all cargo containment technology, South Korean shipbuilders have a strong reputation in this area due to their long experience in welding and construction and operational technologies.
Chinese shipbuilders have recently entered the LNG carrier market and are gaining experience. Until 2021, only Hudong-Zhonghua Shipbuilding in China was capable of constructing large LNG carriers. This company has increased its annual production capacity from three to 11 ships by establishing a dedicated dock for LNG carriers. In the past four years, four other Chinese shipbuilders have also entered this market, and competition is expected to increase as experience grows.
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