South Korean shipbuilders are in talks with Qatar for expected $6.6 billion deals to manufacture additional liquefied natural gas (LNG) tankers as the growing demand for the carrier along with container ships is expected to power overall vessel prices to near a record, according to KED Global.
HD Korea Shipbuilding & Offshore Engineering Co. (HD KSOE), the parent of the world’s No. 2 shipyard HD Hyundai Heavy Industries Co., is discussing with the state-owned QatarEnergy to supply about five LNG carriers, industry sources in Seoul said on Monday.
Samsung Heavy Industries Co. and Hanwha Ocean Co. are also in talks with the company formerly Qatar Petroleum to build some 10 LNG tankers and an unknown number of such vessels, respectively, according to the sources.
QatarEnergy reportedly wanted the three South Korean shipyards to build Q-Max LNG carriers with a capacity of 270,000 cubic meters, larger than the usual 174,000 cubic meter vessels.
The prices of the Q-Max tankers -- "Q" stands for Qatar and "Max" for the maximum size of ship able to dock at the country’s LNG terminals – are higher than the standard carriers due to larger capacities.
Hudong-Zhonghua Shipbuilding, a subsidiary of China State Shipbuilding Corp. (CSSC), agreed to sell 18 Q-Max carriers to QatarEnergy at $6 billion, or $330 million per unit, earlier this year.
South Korean shipbuilders are likely to bag $6.6 billion contracts in total if QatarEnergy orders 20 Q-Max carriers at similar prices to those to be built by the Chinese company, industry sources in Seoul said.
South Korean shipbuilders already won deals worth 13 trillion won ($9.5 billion) in total to build standard-size LNG tankers at the beginning of this year and late last year.
HD KSOE signed deals for 17 LNG carriers, while Samsung Heavy and Hanwha inked contracts for 15 vessels and 12 units, respectively.
The three leading South Korean shipyards are expected to bag more deals as the demand for the vessels is likely to increase, industry sources said.
The global LNG industry needs 100 LNG carriers in addition to 185 tankers, which have been ordered so far, to serve the new liquefaction projects of 175 million tons already greenlighted and under construction worldwide, according to membrane-type cargo tank designer GTT.
Container ship built by HD Korea Shipbuilding & Offshore Engineering (File photo by HD KSOE) Container ship built by HD Korea Shipbuilding & Offshore Engineering (File photo by HD KSOE)
The growing demand for LNG tankers is expected to ramp up the overall new prices further, industry sources in Seoul said.
Clarksons Research said its newbuilding price index, a key gauge of the global shipbuilding sector, stood at 187.98 last month, getting closer to an all-time high of 191.6 recorded in September 2008.
The gain was led by container ships. The average price of new container ships of 22,000-24,000 twenty-foot equivalent units rose 20.9% to $272 million in July from a year earlier.
Container ship prices have been higher than those of LNG carriers since March as shipping companies increased orders, given the rising freight rates.
Smaller shipping companies have been rushing to order container ships for delivery after 2028 since the top five players already dominated shipyards.
South Korean shipbuilders, which had ignored container ship orders due to lower profitability, shifted their business strategies to meet the demand.