"LNG Geummaek Discovered" Joseon, Time for a Reversal

Daewoo Shipbuilding Secures 8 Ships Worth 1.9438 Trillion KRW During Lunar New Year Holiday
Korea Shipbuilding & Offshore Engineering Also Signs Contracts for 9 Ships Recently
Demand for Replacing Aging Vessels Influences
Expectations for Profit Turnaround This Year

[Asia Economy Reporter Jeong Dong-hoon] The shipbuilding industry’s order volume for the month of January exceeded 7 trillion won. After consecutive losses, the struggling ‘K-Shipbuilding’ is dreaming of a turnaround by leading with eco-friendly liquefied natural gas (LNG) carrier and propulsion vessels, ringing in a series of order victories this year.

According to the shipbuilding industry on the 4th, Daewoo Shipbuilding & Marine Engineering (DSME) secured orders for a total of 8 vessels worth approximately 1.8438 trillion won during the Lunar New Year holiday period: 2 LNG carriers from Marangas, a subsidiary of Angelicoussis Group, Greece’s largest shipping company, and 6 container ships from European shipowners. These vessels will be built at the Okpo Shipyard and delivered to the shipowners in the second half of 2025. So far this year, DSME has secured orders for a total of 12 vessels and offshore plants, including 5 LNG carriers, 6 container ships, and 1 offshore plant, worth 2.72 billion USD (approximately 3.2667 trillion won). Compared to last year, the order amount for January to May was fully achieved within just one month.

Korea Shipbuilding & Offshore Engineering also announced consecutive order news. Recently, it signed construction contracts for a total of 9 vessels with three European shipping companies and one Oceania-based shipping company: 2 LNG-powered ro-ro ships (vessels that can load or unload cargo via ramps) of 24,000 tons, 1 LNG bunkering vessel (a dedicated ship supplying fuel to LNG-powered vessels at sea) of 12,500 m³, and 6 container ships of 2,800 TEU (1 TEU equals one 6-meter container). The scale amounts to about 704 billion won. The vessels ordered this time will be built at Hyundai Mipo Dockyard in Ulsan and delivered sequentially to the shipowners starting from the second half of next year. Korea Shipbuilding & Offshore Engineering secured 34 vessels worth 3.7 billion USD (approximately 4.4437 trillion won) in January alone, already achieving about 21.2% of its annual order target (17.44 billion USD, approximately 20.9314 trillion won).

The shipbuilding industry is dreaming of a revival. There is also hope that a ‘turnaround (profitability shift)’ will be possible this year. Amid rapidly increasing demand for replacing aging vessels, the domestic shipbuilding industry’s dominant position in LNG vessels, which are gaining global attention, is seen as a positive factor. The International Maritime Organization (IMO) plans to apply greenhouse gas emission regulations to vessels already in operation starting in 2023. Accordingly, shipowners are compelled to replace old vessels running on heavy fuel oil (bunker C fuel) with the latest eco-friendly vessels to reduce carbon emissions. By 2030, there will be 118 aging vessels over 25 years old, indicating a strong likelihood of continuous LNG vessel replacement demand.

This demand was already proven last year. Last year, Korea Shipbuilding & Offshore Engineering exceeded its order target by 53%, Samsung Heavy Industries by 34%, and Daewoo Shipbuilding & Marine Engineering by 41%. In the case of DSME, which is undergoing financial restructuring, it surpassed its order target for the first time in seven years since 2014 by leading with high value-added vessels such as LNG carriers. The domestic shipbuilding ‘Big 3’ secured 68 out of 78 LNG carriers ordered worldwide last year, accounting for 87%. They recorded 17.44 million CGT (Compensated Gross Tonnage) last year, the largest scale in eight years since 18.45 million CGT in 2013. This corresponds to 37.1% of the global order volume of 46.96 million CGT.

However, the recent rise in energy prices could be a variable that affects the profitability of the shipbuilding industry in the future. The price of shipbuilding steel plates (thick steel plates), which account for about 20% of shipbuilding costs, may face upward pressure due to the sharp rise in coal and oil prices. Analyst Lee Bong-jin of Hanwha Investment & Securities said, "Earnings already reflected large losses in the last quarter, and ship prices are on the rise, so the possibility of further deterioration has decreased," adding, "With the need for additional orders from shipping companies, benefits from economic recovery are expected."

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