Prolonged US-Iran War... Expectations Rise for Spillover Gains in Korean Shipbuilding

Prospects for Increased LNG Carrier Orders
Potential for a Seller's Market
Upward Trend in Global Ship Prices Observed

There are forecasts that the domestic shipbuilding industry could benefit from the aftermath of the US-Iran war. This is due to expectations of both an increase in orders for liquefied natural gas (LNG) carriers originating from the United States and a rise in vessel prices.

According to the financial investment industry on March 8, the scale of LNG projects currently at the front-end engineering design (FEED) stage and expected to reach a final investment decision (FID) in 2026 is 81.0 MTPA (81 million tons per year). Based on this, it is estimated that there will be a new demand for LNG carriers of approximately 131 vessels in 2029 and about 101 vessels in 2030. In contrast, the remaining orderbook at domestic shipyards for 2029 stands at around 60 to 65 vessels. This indicates a high possibility of a future market favoring suppliers.

DS Investment & Securities analyzed, "Rising uncertainties in the Middle East supply chain are likely to shift LNG import sources in Europe and Asia to the United States, leading to increased contracts and FIDs for US projects currently in the FEED stage," adding, "Domestic shipyards can directly benefit from the increase in vessel orders for US projects."

Daol Investment & Securities also predicted, "As the war is expected to be prolonged, development plans for LNG projects in the United States, Australia, Africa, and other regions are accelerating, which will lead to future demand for LNG carrier orders," and added, "The Korean shipbuilding industry, which supplies LNG carriers, will benefit."

Vessel prices are also showing a rebound. According to Clarkson Research, a UK-based shipbuilding and shipping market research company, the price of an LNG carrier as of February 27 was 248.5 million dollars, marking a turnaround after about two years. Actual contract prices for Korean shipbuilders are already reported to be in the range of 252 million to 255 million dollars, with the possibility of exceeding 260 million dollars in 2026 also being raised.

The Worldscale (WS) index, which represents spot (short-term) freight rates for oil tankers, recorded 465.56 points as of March 3 (local time). This is about double the level of February 27, just before the war (224.72 points). During the Red Sea crisis in 2024, maritime freight rates also surged as vessels detoured around the Cape of Good Hope in southern Africa instead of using the Suez Canal, which previously acted as a positive factor for the domestic shipbuilding industry.

This could lead to overall industry improvement. NICE Investors Service, one of the top three credit rating agencies in Korea, analyzed, "Since the main customers of the shipbuilding industry are shipping companies, the improvement in the upstream industry due to rising freight rates could soon result in new vessel orders for shipbuilders," and added, "Especially for tankers, the proportion of order backlog compared to the fleet is small and there is a need for replacement of aging vessels, so orders are likely to increase."

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