Hengli Industrial Group, which received the highest number of orders in China in the first half of this year, is seeking to enter the liquefied natural gas (LNG) carrier manufacturing sector. If Hengli actually begins building LNG carriers, it will be recognized as the sixth shipbuilder in China capable of producing this type of vessel.
Technical Challenges in Building LNG Carriers
LNG carriers must transport natural gas in liquid form at an extremely low temperature of -163 degrees Celsius, which requires complex technologies for cargo tanks and insulation systems. South Korea has dominated the global LNG carrier market since the early 2000s with high technology and efficiency. However, Chinese manufacturers, with accumulated experience in construction and competitive pricing, are gradually capturing a larger share of this market.
Build First, Sell Later Strategy
Hengli Industrial Group reported on September 23 that the company is planning to build two LNG carriers without buyers and is looking to enter the market through a "build first, sell later" strategy. This strategy has previously been employed in the very large crude carrier (VLCC) and very large ammonia carrier (VLAC) markets.
Currently, five Chinese manufacturers have a history of building LNG carriers. Among state-owned manufacturers, Hudong–Zhonghua Shipbuilding and Jiangnan Shipyard and Dalian Shipbuilding Industry Co., along with private companies like Yangzijiang Shipbuilding, are active in this field.
Since 2024, Hengli Industrial Group has been seeking to obtain licenses for technologies related to LNG cargo containment systems and collaborating with the French company GTT. The company aims to establish the necessary infrastructure for building LNG carriers by signing a technical cooperation agreement in January 2025.
Rapid Growth of Hengli Industrial Group
Hengli Industrial Group is rapidly expanding and received 207 orders in the first half of this year, ranking first in the number of orders for a shipbuilding yard. The total orders for this company exceed 500 vessels, of which about 380 are planned for delivery by 2030.
With Hengli Industrial Group entering the LNG carrier market, competition in this sector, which South Korea previously dominated, may intensify significantly. According to published reports, in the first half of this year, China surpassed South Korea by ordering 52 LNG carriers (57.8%) compared to South Korea's 37 carriers (41.1%).
