[Click eStock] New Record in LNG Ship Orders and Imminent Additional Rise in New Ship Prices

[Asia Economy Reporter Lee Seon-ae] Korea Investment & Securities on the 1st issued an overweight investment opinion on the shipbuilding industry.

Korean shipbuilding, which has already exceeded its order target by more than 30% until October, faced speculative orders for LNG carriers from Greek shipowners in November. The order of three LNG carriers by Hyundai Heavy Industries Group announced on November 5 was due to speculative orders from Greek Capital Gas. Subsequently, Daewoo Shipbuilding & Marine Engineering also announced an order on the 11th for two vessels (with an additional two options) from Maran Gas. At the end of November, Daewoo Shipbuilding & Marine Engineering reportedly secured an additional confirmed order of two vessels and two options from BW LNG. In addition, foreign media reported that Gaslog is negotiating orders for four LNG carriers with Daewoo Shipbuilding & Marine Engineering and two with Samsung Heavy Industries for speculative orders. Greek shipowners such as Minerva and Alpha Gas are also reported to be in discussions with Northeast Asian shipbuilders for LNG carrier construction.

Including the rumored 2+2 vessel order from BW LNG to Daewoo Shipbuilding & Marine Engineering, the number of large (140k-CBM or above) LNG carrier orders for Korean shipbuilders this year is 57 vessels, expected to surpass the previous record of 58 vessels set in 2018. Kwangsik Choi, a researcher at Korea Investment & Securities, explained, "Although there was a 6-vessel berth declaration from Qatar to Daewoo Shipbuilding & Marine Engineering and Samsung Heavy Industries recently, assuming the main contracts will be signed early next year, the large-scale newbuilding order negotiations led by the aforementioned Greek shipowners indicate that a new record is imminent."

The background of the Greek shipowners' speculative orders is due to strong freight rates, expectations of resale and newbuilding price increases caused by slot shortages from 2025, and mid-to-long-term LNG carrier capacity shortages due to CO2 regulations. Researcher Choi emphasized, "Korean shipbuilders have already secured all delivery slots for 2024, and delivery slots for 2025 are becoming scarce," adding, "Depending on the future LNG carrier market, a vessel shortage will occur, leading to increases in resale prices and newbuilding prices for the speculatively ordered vessels, which can be linked to highly profitable charters in the future."

In 2022, dozens of vessels for Qatar will be delivered first. Additionally, the replacement cycle of aging vessels due to CO2 regulations will also be added. If subsequent speculative and replacement orders continue, there is a high possibility of breaking the 2021 record again. Researcher Choi recommended, "Mid-to-long-term investment in the LNG carrier supply chain is advised," and added, "Investment targets include Korea's shipbuilding BIG3, HSD Engine, and Korea Carbon, which produces insulation materials."

This content was produced with the assistance of AI translation services.