South Korean dockyards aim to expand their presence in the global tanker market dominated by Chinese players with vessels designed to transport or store liquids such as oil and chemicals powered by eco-friendly fuels amid the expected downturn in the world’s shipbuilding industry.

Hyundai Samho Heavy Industries Co., an affiliate of HD Korea Shipbuilding & Offshore Engineering Co., was expected to win an order to build two Suezmax tankers with a capacity of some 150,000 deadweight tonnages (DWT) each from a European customer, according to a global shipping market news provider TradeWinds.

Those vessels to be delivered in 2026 have options to use methanol as fuel, which would be the first case for a Suezmax tanker to be powered by an eco-friendly combustible.

Those ships were priced at $85.5 million each, higher than an average price of $85 million for new vessels with similar specifications. Hyundai Samho is predicted to earn millions of dollars more if the buyer exercises the options.

Chinese shipbuilders have been sweeping orders for tankers so far this year, offering the vessels lower prices than those for South Korean ships by 15-20%.

Shipyards in the mainland have won contracts to build 98 large tankers in the first 10 months, while their competitors in the Korean peninsular have inked deals only for 22 vessels, according to global industry tracker Clarksons Research. South Korean shipbuilders focused more on vessels with more profits such as liquefied natural gas (LNG) carriers.

Prices of tankers are around only a third of LNG carriers. But it usually takes only a year or one and a half years to build them, relatively shorter than other ships, while shipbuilders can effectively operate their docks given smaller sizes of those tankers, industry sources said.

Demand for new tankers is expected to grow from the next year as the ages of all tankers are averaged at 12 years or older. Togher regulations on carbon emissions are also likely to boost demand for tankers run with eco-friendly fuels.

South Korean shipbuilders are predicted to seek tanker deals to fill their order books for the coming years amid growing views that prices and orders for LNG carriers may have peaked out. Orders for new ships already shrank to 1,324 vessels in the first 10 months of the year from 2,337 ships and 2,068 vessels in the same period of 2022 and 2021, respectively, according to Clarksons Research.

Local shipyards also aimed to win more orders to build carriers for other gases rather than LNG. Hyundai Samho has recently signed a letter of intent with a Denmark company to manufacture 10 very large ammonia carriers at $1.1 billion, which would be the largest deal for such vessels, foreign media reported.

Source: The Korea Economic Daily