Korean media: Market share surges, China's LNG carriers are catching up with South Korea!

On June 16, the South Korean newspaper "The Korea Herald" published an article stating that China has decided to strengthen its liquefied natural gas (LNG) carrier construction capabilities. As LNG carriers are the main export products of South Korea's shipbuilding industry, South Korean shipbuilders are feeling nervous. This is because if China, which already leads in the global shipbuilding market, narrows the technological gap in the LNG carrier sector and expands production capacity, South Korea's order share may be threatened.

The new shipyard of Hudong-Zhonghua Shipbuilding Co., Ltd., a subsidiary of China State Shipbuilding Corporation, located on Changxing Island in Shanghai, has recently officially commenced operations. The group invested 18 billion yuan RMB in building this shipyard. Once fully operational, the output of LNG carriers is expected to increase from 6 ships per year to more than 10 ships.

In the past, South Korea dominated the LNG carrier order market, followed by China, but in recent years the gap has been narrowing. According to predictions by the Overseas Economic Research Institute of South Korea's Export-Import Bank, South Korea's market share for LNG carriers was 87% in 2021, 70% in 2022, 80% in 2023, and 62% in 2024. On the other hand, China's market share surged from 10% in 2021 to 38% in 2024.

Meanwhile, some analysts claim that the technological gap between South Korea and China in the LNG carrier sector has significantly narrowed. Therefore, if China Shipbuilding Group expands its capacity, South Korea's leading position in the LNG carrier order market may be shaken.

However, South Korean industries believe that the increase in Hudong-Zhonghua's LNG carrier production capacity will not pose a direct threat. This is because the scale of China's shipyards' LNG carrier production is still not large enough. The annual production capacity of major South Korean shipbuilders such as HD Hyundai Ocean, Hanwha Ocean, and Samsung Heavy Industries for LNG carriers is 65 ships, while China's shipyards have an annual production capacity of around 15 ships.

However, Lee Jang-hyun, a professor at Inha University's Department of Naval Architecture and Ocean Engineering, warned that "If China increases its capacity, it may actively obtain LNG carrier orders at low prices. It is premature to draw conclusions now since the relationship between the growth of the liquefied natural gas market, China's backlog of orders, facility capacity, and future orders remains uncertain. However, if all these conditions come together, it could have a significant impact on South Korea's shipbuilding industry."

Source: https://www.toutiao.com/article/1835068336629769/

Disclaimer: This article represents the views of the author alone.