Ammonia fuel is attracting attention in the global shipping industry as a next-generation clean marine fuel, and Chinese shipbuilders are accelerating their capacity to build very large liquid ammonia carriers (VLACs) in order to gain more competitiveness in the market. Although South Korean shipbuilders are currently more competitive in the VLAC market, Chinese shipbuilders are expected to lead the quality breakthrough with quantity as the number of new orders continues to increase.
In 2023, a total of 25 VLACs were ordered globally, with South Korean shipbuilders receiving orders for 19 ships, with a market share of 76%, which were constructed by HD Korea Shipbuilding & Offshore Engineering (HD KSOE) and Hanwha Ocean, respectively; and Chinese shipbuilders receiving orders for 6 ships, all of which were constructed by Jiangnan Shipbuilding, with a market share of 24%.
And the first half of this year, the world has ordered a total of 32 VLAC, South Korean shipbuilders undertook a total of 22, the market share reduced to 68%, of which Samsung Heavy Industries, Hanwha Ocean were constructed 2 respectively, and the remaining 18 all undertaken by the HD KSOE’s shipbuilding subsidiaries; Chinese shipbuilders undertook 10, accounting for an increase to 32%, of which the China State Shipbuilding Corporation Jiangnan Shipbuilding undertook 6, Yangzijiang Shipbuilding undertook 4.
According to the data of the first half of the year, South Korean shipbuilders still occupy the leading position in the VLAC market, but Chinese shipbuilders are struggling to catch up and working hard to improve their VLAC construction capabilities.
Generally speaking, the more VLAC orders a shipbuilder receives, the stronger its accumulated construction technology will be. Chinese shipbuilders continue to undertake new VLACs, is bound to further enhance the construction capacity of this VLAC to play a positive role, which is expected to “realize a qualitative leap through the accumulation of quantity”.
Some Korean media believe that the VLAC order book of Chinese shipbuilders is being influenced by the positive attitude of Singapore and Japanese shipowners. On the one hand, Singapore has a close relationship with China in terms of energy supply, and China is the world’s largest producer of ammonia. On the other hand, Japanese shipowners have a long history of cooperation with Chinese shipbuilders and are more inclined to choose Chinese shipbuilders.
The first VLAC order in China’s shipbuilding industry came from a Singaporean shipowner. In May 2023, Jiangnan Shipbuilding, together with China Shipbuilding Trading (CSTC), signed a construction contract for four 93,000 cbm VLACs with Singaporean shipping company East Pacific Shipping (EPS), which became the first VLAC order in China’s shipbuilding industry; four months later, EPS announced an additional order for two 93,000 cbm VLACs from Jiangnan Shipbuilding.
In August 2024, another Singaporean shipping company, JALDHI, signed a contract with Jiangnan Shipbuilding for the construction of 2+2 93,000 cbm VLACs, which is the first time for JALDHI to build a large-scale liquefied gas carrier in China, and the first time for JALDHI to place an order to build a ship in a shipyard under the China State Shipbuilding Corporation (CSSC), with the cost of a single ship reported to be $120 million.
In addition, AW Shipping, a strategic joint venture between ANDOC Logistics & Services, a subsidiary of Abu Dhabi National Oil Company (ADNOC), and Wanhua Chemical Group, has also ordered 2+2 93,000 cbm VLACs from Jiangnan Shipbuilding, which are expected to be delivered between 2026 and 2028.
In addition to Jiangnan Shipbuilding, Yangzijiang Shipbuilding Group, China’s largest private shipbuilding enterprise, has become the second domestic shipyard and the first domestic private shipyard to take orders for real VLACs. Not long ago, Nissen Kaiun signed a contract with Jiangsu Yangzi-Mitsui Shipbuilding, a joint venture shipyard of Yangzijiang Shipbuilding, for the construction of four 88,000 cbm VLACs. This is another major breakthrough for Yangzijiang Shipbuilding as the “leader” of private shipbuilder, and it also means that the global competitiveness of Chinese shipbuilding industry in the VLAC market segment has been further strengthened.
Industry reports show that the scale of ammonia transportation is expected to reach 78 million tons by 2030, while 10 VLACs are currently required to transport 5 million tons of ammonia, and given the 3-4 year construction cycle of VLACs, a total of 140 VLACs will be required during the 5-year period from 2023 to 2027. In addition to the approximately 40 newbuildings that have been ordered during this period, it is expected that another 100 new VLACs will be built to meet market demand.
This also means that Chinese shipbuilders will have more chances to get orders for this type of vessel, and the competition for orders between Chinese and Korean shipbuilders in the VLAC market will be more intense.