Chinese Penetrate South Korea’s LNG Carrier Market

Chinese shipbuilders secured nearly 40% of all large liquefied natural gas (LNG) carriers ordered globally between January and September, surpassing South Korean shipyards. While China dominates the general merchant ship market, including container ships and bulk carriers, South Korean shipbuilders hold a strong position in high-value LNG carriers due to their differentiated technology.

Clarksons Research reported that South Korea had 173 orders as of Q3 2023, compared to China's 71, but China has rapidly improved its production capabilities in recent years. LNG carriers transport liquefied gas at minus 163 degrees Celsius, requiring stringent cargo containment technology to prevent leaks and ensure reliquefaction.

South Korean shipyards excel in welding, construction, and operational technologies, crucial for vessel efficiency. However, Chinese shipyards have recently entered the LNG carrier market, starting to build experience and compete in the long-term battle. Despite only one Chinese shipbuilder, Hudong-Zhonghua Shipbuilding, having constructed large LNG carriers before 2021, four more have joined the market since then.

Chinese shipyards are capitalizing on South Korea's saturated shipbuilding docks by securing urgent orders from shipowners amid the global energy transition. The next three to four years will be critical for South Korean shipbuilders, as they must prove the reliability of their newer vessels through special inspections before 2030.