K-Chosun, 2nd in Market Share for 4 Years... Closely Watching Rising Chinese Competition in LNG Shipbuilding as a 'Mainstay'

2019 4% Point Gap
Grew to 15% Points in 2021
LNG Carrier Dominance Continues
China's Order Volume More Than Tripled
Rising Tensions Over Price Competitiveness

[Asia Economy Reporter Choi Seoyoon] It has been four years since Korean shipbuilders, who were leading the world, were overtaken by China. Looking at the cumulative market share until last month, it seems difficult to reclaim the top position this year as well. Although Korean shipbuilders maintain profitability by capturing 80-90% of the global orders in the liquefied natural gas (LNG) carrier market, China is aggressively advancing even in this sector, heightening tensions.

According to Clarkson Research, a UK-based maritime market research firm, Korea lost its number one position to China in 2019 with a market share of 32% compared to China’s 36%. In 2018, Korea held a significant lead with a 38% share over China’s 31%, but since being overtaken, the gap has widened to 6 percentage points in 2020 and 15 percentage points in 2021.

Although Korea is losing out in price competitiveness, it has solidified a monopoly in the high value-added LNG carrier market. Market share is calculated based on CGT (Compensated Gross Tonnage), which considers the added value and complexity of shipbuilding rather than just the number of ships ordered. The more technologically advanced and difficult to build the ship, like LNG carriers, the higher the CGT. This has led to an assessment that the quality of orders has improved. Supported by global environmental regulations tightening and increased LNG carrier orders from Qatar Energy, the newbuilding price of LNG carriers has risen by 18% so far this year.

However, China’s rapid expansion in the LNG carrier market has emerged as another variable. With Korean shipbuilders’ order books full due to sweeping LNG carrier orders, Chinese shipbuilders are capturing the remaining demand and enjoying a surge in orders.

Reuters recently reported that three Chinese shipbuilders secured about 30% of the world’s new LNG carrier orders this year, more than triple the 9% share last year. Among these three companies, only one has prior experience in LNG carrier construction. Despite recently obtaining LNG carrier construction certification, Chinese shipbuilders are successfully securing overseas orders as well. As of the end of November this year, Chinese shipbuilders have secured 66 LNG carriers, accounting for 21% of the global LNG order backlog (312 vessels, $60 billion).

There is also an analysis that China seized the opportunity because Korean shipbuilders could not handle all the orders. Professor Cho Daeseung of the Department of Naval Architecture and Ocean Engineering at Pusan National University said, "China has gained an opportunity to hone LNG carrier construction technology and will experience a learning effect on this technology. Before China enhances its LNG shipbuilding capabilities, we must continuously develop technology and secure price competitiveness. It is time for not only the industry but also the government to provide generous support."

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