Korea, China, Japan compete for dominance in methanol-powered ships

Methanol-fueled ships have eclipsed liquefied natural gas (LNG) vessels, claiming the premier position for the highest number of environmentally friendly ship orders placed from January to July this year, BusinessKorea reports.

South Korea’s shipbuilding sector, which has been cultivating its technological expertise in methanol-powered ships as its future growth engine for years, is at the forefront of driving the global market. Nevertheless, the shipbuilding industries of China and Japan are also making significant strides in their pursuit, intensifying the competition.

Based on data provided by the Korea LNG Bunkering Industry Association and DNV on Aug. 6, a total of 122 construction contracts for methanol-fueled ships were secured during the period from January to July this year. In comparison, there were 73 contracts for LNG-powered ships within the same time frame. This marks a significant shift from the previous year when LNG-powered ships held the majority at 222 compared to methanol-powered ships at 35.

Except for the months of March and April, the contract volume for methanol-powered ships has exceeded that of LNG-powered ships every month this year. As the momentum behind methanol-propelled vessels solidified, July alone witnessed an influx of 48 new contracts. As a result, within the global shipbuilding order backlog, the share of methanol-powered ships has surged to 10.7 percent, establishing a robust position alongside LNG-powered ships at 23.1 percent. Traditional-fueled vessels still dominate the order backlog at 63.5 percent.

At the forefront of the environmentally friendly shipbuilding market, the South Korean shipbuilding industry has taken the lead by securing contracts for methanol-powered vessels, with a specific emphasis on large-scale container ships. In February, HD Korea Shipbuilding & Offshore Engineering clinched an impressive total of 54 orders, including a fleet of seven 9,000 TEU vessels for HMM. Notably, this order includes 18 methanol-powered container ships, marking a significant milestone as Maersk placed the world’s inaugural order for such vessels. Meanwhile, Samsung Heavy Industries received an order last month for 16 vessels of 16,000 TEU capacity from Evergreen of Taiwan, and HJ Heavy Industries also secured an order for 2 vessels of 9,000 TEU capacity from HMM.

Last month, HD Korea Shipbuilding & Offshore Engineering achieved a significant milestone by delivering a pioneering 2,100 TEU container vessel, which served as a demonstrative project for Maersk’s ambitious methanol propulsion initiative. This marks the world’s first methanol-powered container ship.

The competitive pursuit from China and Japan is equally assertive. Chinese shipbuilders, including Dalian Shipbuilding Industry and Yangzijiang Shipbuilding, have clinched contracts for a total of 12 sizeable methanol-powered container vessels, each with a capacity of 9,000 TEU or more, ordered between April and June this year. This achievement can be attributed to their sole acquisition of orders placed by prominent shipping entities like France’s CMA-CGM and Denmark’s Maersk.

Capitalizing on its domestic transportation needs and the infrastructure of coal-derived methanol, China is strategically luring prominent global shipping corporations. Maersk, for instance, has strategically collaborated with three Chinese methanol enterprises - Debo Energy, CIMC, and Green Technology Bank - to establish partnerships securing an annual supply of eco-friendly methanol for fuel, reaching a substantial volume of 800,000 tons.

Within the sector of pure car and truck carriers (PCTC), which China commands a substantial presence in, two 9,000 CEU-class ships are currently under construction at affiliated shipyards, commissioned by China Merchants Group. Last October, China’s state-owned maritime entity, COSCO, made a noteworthy order for 12 sizeable methanol-powered vessels, each boasting a capacity of 24,000 TEU. This strategic procurement was orchestrated in collaboration with domestic shipyards such as Dalian DACKS and Nantong NACKS. DACKS and NACKS are joint ventures between Japan’s Kawasaki Heavy Industries and COSCO. Meanwhile, Japan’s Nippon Shipyard also secured an order for eight large methanol-powered container ships from Taiwan’s Evergreen last month.

In tandem with the intense competition for shipbuilding contracts, a comparable battle is unfolding within the realm of ship engines. Korean engine manufacturers have etched their mark by securing a pioneering position, attaining the distinction of being the first in the world to assemble mass production technology for sizable methanol engines, an indispensable component for methanol-propelled vessels. Building upon their monumental legacy in the LNG sector, Korea finds itself strategically poised to supply the “heart” of the maritime methanol era as well. Conversely, China has been confronted with the Korean imperative to procure this pivotal "heart" by Korean engine manufacturers within the unfolding methanol era. Accordingly, China is working towards domestic methanol engine production through a synergy of cooperation among state-owned enterprises. China’s state-owned ship engine manufacturer, CSSC MES Diesel (CMD), has secured a significant contract encompassing the production of engines destined to power the 12 methanol-propelled ships from COSCO.