Chinese Yards Set To Scale Up LNG Newbuild Construction at Record Pace

Credits: CSSC Chengxi Shipbuilding Co.
  • CSSC dominated Chinese LNG orderbook with over 60 newbuild orders
  • US FOB contracts underpin large share of domestic newbuild orders
  • Chinese NOCs, traders, shipping firms driving domestic LNG ship orders

Chinese shipyards have accumulated their largest number of LNG newbuild orders till date, positioning them in coming years as an alternative to South Korean yards who currently dominate the LNG ship construction space, reports Platts.

While Chinese yards have been successful in expanding the market share in other ship types such as crude and refined product tankers, and dry bulk vessels, the LNG carrier space has been elusive due to the need for more technological and shipbuilding expertise.

Rush for long-term LNG contracts

The main Korean yards such as Samsung Heavy Industries, Hyundai Heavy Industries and Daewoo Shipbuilding & Marine Engineering collectively have the largest market share in LNG shipping, with a reputation for high-quality construction and delivering ships on schedule, sometimes well ahead of the LNG projects they may be linked to.

However, in recent years, the rush for long-term LNG contracts after the Ukraine crisis resulted in new LNG ship orders that pushed yard capacity in South Korea to its limit, opening the door for Chinese yards to expand their presence.

One shipbuilder has accounted for the bulk of China’s LNG newbuild orders — China State Shipbuilding Corp., or CSSC — whose orderbook stood at around 60 ships at the time of writing, with deliveries expected up to 2028, according to company officials.

In the first half of 2023, Chinese yards received 14 large LNG carrier orders, accounting for 35% of global orders for the period, state-owned media Xinhua News Agency reported Aug. 17. CSSC said in January that it had received 49 LNG newbuild in 2022, taking China’s share of carrier orders for the year to around 30% from less than 7% in 2021.

In addition to CSSC, two more Chinese shipbuilders — Jiangsu Yangzijiang Shipbuilding and China Merchants Heavy Industry — received their first LNG newbuild orders in October and December 2022, respectively, Xinhua reported in February. These took total Chinese newbuild orders to 55 in 2022, Xinhua said.

CSSC executives said that its main LNG carrier has a capacity of around 174,000-175,000 cu m, while the ones from China Merchants Heavy Industry is around 180,000 cu m.

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Source: Platts


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