- CMA-CGM Plans to Order 12 LNG Dual-Fuel Mega Ships.
- Chinese Yards Undercut Prices in Fierce Bidding War.
- U.S. Tariffs on Chinese Ships May Shift Order Dynamics.
Korean and Chinese shipbuilders are in a heated race for a huge container ship order from France, valued at around 4 trillion won. With global orders for LNG carriers on the decline, the spotlight is shifting to container ships, intensifying the competition between these two nations, reports Business Korea.
CMA-CGM is Planning to Order 12 LNG Dual-Fuel Ships
CMA-CGM, the third-largest shipping company in the world, is gearing up to place an order for 12 LNG dual-fuel container ships, each with a capacity ranging from 21,000 to 24,000 TEU. The estimated cost for each ship is about $250 million (around 346 billion won), bringing the total to approximately 4.152 trillion won. This order consists of six firm contracts, along with an option for six additional ships.
Korean vs. Chinese Shipyards
Korea’s HD Hyundai Heavy Industries, Hanwha Ocean, and Samsung Heavy Industries are competing against Chinese companies like CSSC, Hudong-Zhonghua, and Jiangnan Shipyard. While China has a pricing advantage, Korea is banking on its cutting-edge technology and dependable delivery.
Price Competition Heats Up
Korean firms are quoting around $250 million for a 21,000 TEU ship, but their Chinese counterparts are offering prices as low as $230 million. Hudong-Zhonghua has reportedly put forth a bid of just $207 million, significantly undercutting the current market price of $220 million for vessels of this size.
U.S. Tariffs May Favour Korean Shipyards
The Trump administration in the U.S. is set to introduce tariffs on ships built in China starting in October, $50 per ton for Chinese-flagged vessels and $18 per ton for those constructed in China. These increasing costs could dissuade shipping companies from opting for Chinese shipyards, particularly for routes heading to the U.S.
HD Hyundai is in a Strong Position
Earlier this year, HD Hyundai landed a $2.57 billion (3.7 trillion won) contract from CMA-CGM for 12 LNG dual-fuel ships (15,500 TEU). This new, larger order could potentially expand that agreement. However, CMA-CGM maintains strong relationships with Chinese builders, with 30% of its fleet produced in China, including 10 large LNG ships ordered from Jiangnan in 2023.
Market Share Shifts
Last year, China dominated the container ship market, holding a significant 86.6% share. However, this year, Korea has made significant strides, capturing 38.2% compared to China’s 51.2% in the first five months. Recently, China has bounced back after MSC placed an order for 20 large container ships from five different Chinese shipyards.
Container Ships Now Costlier Than LNG Carriers
Since the middle of 2023, the cost of container ships has surpassed that of LNG carriers. Back in June of last year, a container ship was priced at $268.5 million, edging out LNG carriers, which were at $264 million. Fast forward to this year, and container ships are now valued at $273 million, while LNG carriers have dropped to $255 million.
Outlook: Competition to Remain Intense
With container ship prices on the rise and ongoing geopolitical tensions, the rivalry between Korea and China in shipbuilding is expected to heat up. Container ships have taken centre stage, becoming the primary focus for major shipyards, pushing LNG carriers to the sidelines.
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Source: Business Korea
