The price of liquefied natural gas (LNG) carriers reached $245 million on October 23, showing a $3 million decrease from $248 million on the same date last year. This price drop occurs while demand for these types of vessels continues to rise.
Increasing competition from Chinese manufacturers
The entry of Chinese manufacturers into the high-value ship market and their aggressive supply strategies have put downward pressure on new shipbuilding prices. According to research firm Clarkson, the price of large container ships has also decreased during this period from $266.5 million to around $242 million. This price reduction occurs at a time when orders for LNG carriers have increased more than 4.5 times compared to last year.
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Challenges facing Korean manufacturers
Korean shipbuilders are quickly facing challenges. It is estimated that the operating profit of HD Korea Shipbuilding & Offshore Engineering will increase by 50.5% in the third quarter of this year compared to last year, reaching 1.5854 trillion won. Meanwhile, Hanwha Ocean and Samsung Heavy Industries also expect profit growth of 86.5% and 8.9%, respectively. However, if the price of ships continues to decline, their profitability may be affected.
Oversupply of ships and the mismatch between ship deliveries and LNG production schedules also exacerbate the limitations on price recovery. With a large number of ordered ships from 2022 entering the service cycle and delays in major LNG production projects, such as the North Field East project in Qatar, there is less incentive for ship owners to pay high new prices.
Industry experts believe that Korean shipbuilders must rapidly accelerate technology development and business diversification to maintain their competitive edge against Chinese rivals. The year 2029, when the quality and performance of ships built by new Chinese manufacturers become clearer, could be a critical test for this competition. In response to these challenges, Korean manufacturers are expanding their activities from conventional commercial ships to higher-value businesses such as ships equipped with small modular reactors (SMR), offshore power generation facilities, and floating LNG production units.
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