South Korean shipbuilders land KRW 2 trillion in orders in a single day

The global decarbonization trend has significantly influenced the shipbuilding industry

The three major domestic shipbuilders – HD Korea Shipbuilding, Hanwha Ocean, and Samsung Heavy Industries – announced on Oct. 2 that they had secured shipbuilding orders worth over 2 trillion won in a single day. This marks the first time since 2008 that these shipbuilders have achieved such a milestone, reflecting a significant resurgence in the industry, BusinessKorea reports.

Hanwha Ocean received an order for one LNG-FSRU (Floating Storage and Regasification Unit) worth 545.4 billion won from an Asian shipowner. HD Korea Shipbuilding signed contracts to build two ultra-large ethane carriers (ULEC) with an Asian shipping company, two liquefied petroleum gas (LPG) carriers with an Oceania shipping company, and one LNG bunkering vessel, totaling 881.4 billion won. Meanwhile, Samsung Heavy Industries secured a contract worth 678.3 billion won with an Asian shipowner to build two LNG carriers. The combined order amount for the three companies is 2.1051 trillion won.

The International Maritime Organization (IMO) has set a goal to achieve 'zero' carbon emissions by 2050, which has driven the demand for eco-friendly ships. The market price for a standard LNG carrier is around $265 million per vessel, while an LNG-FSRU exceeds $400 million per vessel. Out of the world's 42 LNG-FSRUs, 32 were built by domestic shipbuilders, with Hanwha Ocean building 12, HD Hyundai Heavy Industries building 10, and Samsung Heavy Industries building 10.

Considering the increase in demand for LNG and the LNG projects under development, Samsung Heavy Industries expects orders for new LNG carriers to remain steady at around 70 vessels. A company official commented, "In addition to the consistently ordered LNG carriers, we expect additional orders centered around floating LNG (FLNG) facilities, where we have overwhelming competitiveness. We will also continue to develop eco-friendly technologies to dominate future new product markets."

The global decarbonization trend, driven by international agreements such as the Paris Agreement and regulations set by organizations like the IMO, has significantly influenced the shipbuilding industry. The push for sustainable practices in global trade has increased the demand for eco-friendly ships designed to reduce greenhouse gas emissions. This trend is evident in the recent orders secured by the three major domestic shipbuilders.

The shipbuilding industry has experienced cyclical booms and busts, with the last significant boom occurring in 2008. The current resurgence is driven by technological advancements in shipbuilding, such as the development of LNG-FSRUs and ULECs, which are in high demand due to their efficiency and eco-friendliness. The rising prices of new ships have also contributed to the profitability of shipbuilders, allowing them to be selective about the projects they undertake.

The competitive landscape of the shipbuilding market, particularly the dominance of South Korean shipbuilders in constructing high-value-added ships, has enabled these companies to secure large orders.

As of now, the shipbuilding industry is poised for continued growth, with expectations of additional orders and advancements in eco-friendly technologies. The recent success of HD Korea Shipbuilding, Hanwha Ocean, and Samsung Heavy Industries underscores the importance of innovation and sustainability in the global maritime sector.