Since the construction of the first liquefied natural gas (LNG) carrier in 1994, the Korean shipbuilding industry has achieved a record of 500 large-scale LNG carriers exported over a period of 30 years. LNG carriers can safely transport LNG at ultra-low temperatures of -163 degrees Celsius, which is a high-value-added ship type that is extremely difficult to build, and has been constructed by only nine countries in the world, with the cost of a single unit of more than 300 billion won (about $218 million). The cost of a new shipbuilding is more than 300 billion won (about $218 million).
Recently, a naming ceremony was held at Samsung Heavy Industries for the LNG carrier Orion Spirit, the 500th large-scale LNG carrier built and exported by the Korean shipbuilding industry since 1994. Orion Spirit, which will be delivered to J.P. Morgan, has an overall length of 284.5 meters, a beam of 45.8 meters, a height of 26.2 meters with a speed of 19.5 knots.
In the past 30 years, 680 LNG carriers have been built globally, with South Korean companies accounting for about 74% (about 500) of the total, with current on-hand orders amounting to 256 ships.
In the first quarter of this year, new ship orders undertaken by Korean shipbuilders reached a total of $13.6 billion, an increase of 41.4 % over the same period last year, which is the first time since the fourth quarter of 2021 that South Korea has ranked first in the world in terms of the value of new ship orders on a quarterly basis. During this period, Korean shipbuilders accounted for about 44.7 % of the world’s total new ship orders, and received 100 % of the orders for environmentally friendly ships from global shipowners, including 29 LNG carriers and 20 ammonia carriers.
In addition, Korean media reported earlier this month that the average utilization rate, as an indirect indicator of shipyard operations, has improved significantly. In the case of Hanwha Ocean Geoje Shipyard, for example, the annual average utilization rate exceeded 100 % until 2020, declined to 98.8 % in 2021, 94.6 % in 2022, and recovered to 97.1 % by the end of 2023. During the same period, Samsung Heavy Industries’ Geoje Shipyard’s average annual utilization rate dropped from 97.2% to 86.3% before recovering to 97.4%. It is estimated that the average utilization rate of both shipyards has exceeded 100 % in the first quarter of this year.
The average utilization rates of HD Korea Shipbuilding & Offshore Engineering’s (HD KSOE) three shipbuilding subsidiaries are also gradually picking up. HD Hyundai Heavy Industries Ulsan Shipyard has an average utilization rate of 63.5% in 2021, increasing to 65.7% and 81.3% in 2022 and 2023, respectively; HD Hyundai Mipo Ulsan Shipyard rises to 88.4% in 2022 from 75.3% in 2021, increasing to 93.8%; HD Hyundai Samho from 87.9% in 2021 to 95.8% in 2022 and to 111.6% in 2023.
The increase in the average utilization rate of shipyards means that the advantages of rapid construction and delivery of South Korea’s shipbuilding industry are gradually recovering, thus driving the growth of South Korea’s ship exports. South Korea’s Ministry of Trade, Industry and Resources (MOTIE) statistics, as of March, South Korea’s monthly ship exports have been rising for eight consecutive months, exports from January to March this year reached 6.63 billion US dollars, an increase of 64.3% over the same period last year, the highest increase in 15 major export projects in South Korea.
In order to continue to maintain Korea’s world-leading position in shipbuilding technology, Korea’s MOTIE plans to formulate a “Roadmap for Korea’s Shipbuilding ‘Super-Gap Technology'” by June this year; and a “Plan for stronger self-sustainability of small and medium-sized shipbuilders and the materials and equipment industry” by the end of the year.
In March, Korea MOTIE announced the launch of the “K-Shipbuilding Next Generation Initiative”, a government-sponsored cooperation platform. It also signed a Joint Response Agreement with HD KSOE, Hanwha Ocean, Samsung Heavy Industries, and HD KSOE’s supporting equipment associations to ensure the competitiveness of the Korean shipbuilding industry’s super-gap. According to the agreement, the Korean government and the three major shipbuilding companies will invest 9 trillion won over the next five years to further secure Korea’s “super-gap” technological advantage in the shipbuilding field and to cultivate domestic and foreign shipbuilding manpower.
“We have achieved the record of exporting 500 large LNG carriers in 30 years, which is a worldwide recognition of Korea’s shipbuilding technology and manufacturing capability,” said a MOTIE official. “This year, we will invest about 250 billion won in technologies such as environmentally friendly ships and smart ships, which is the largest investment ever. No effort will also be spared to support domestic shipyards in building safe and high-performance ships.”