Global Shipping Companies Eyeing Korean LNG Vessels with Rising Prices... Hyundai Heavy Industries Raises Prices for 3 Ships and Renews Contracts

The photo shows an LNG carrier built by Hyundai Heavy Industries. It is not directly related to the article. Photo by Korea Shipbuilding & Offshore Engineering [Image source=Yonhap News]

[Asia Economy Reporter Jeong Dong-hoon] Domestic shipbuilders are increasingly renegotiating contracts by raising the prices of LNG (liquefied natural gas) carriers, which are eco-friendly vessels.

Korea Shipbuilding & Offshore Engineering, the shipbuilding holding company of Hyundai Heavy Industries Group, announced on the 6th that the contract counterparties, contract amounts, and contract periods for three LNG carriers contracted in January and July last year have been changed.

Korea Shipbuilding & Offshore Engineering revealed that one LNG carrier contracted with a Liberian shipping company for 198.9 billion KRW in January last year was renegotiated with an Oceania shipping company for 314.1 billion KRW. It also added that two LNG carriers ordered from the same Liberian shipping company for 420.7 billion KRW in July last year were reordered from an Oceania shipping company for 628.2 billion KRW.

A representative from Korea Shipbuilding & Offshore Engineering said, "Due to supply disruptions of key parts necessary for shipbuilding, the contract was terminated by mutual agreement with the original shipowner, and a new contract was signed with a new shipowner after the termination." Following this contract change, the total order amount increased by 322.7 billion KRW from 619.6 billion KRW to 942.3 billion KRW.

These vessels are being built at Hyundai Samho Heavy Industries in Mokpo, Jeollanam-do, and are scheduled to be delivered to the shipowners in August next year and August 2024, respectively.

Meanwhile, due to the recent increase in LNG demand, orders for LNG carriers, in which Korea has competitiveness, are significantly rising. According to Clarkson Research, a UK-based shipbuilding and shipping market analysis firm, the global LNG carrier order volume in the first half of this year (January to June) totaled 7,678,585 CGT (compensated gross tonnage, equivalent to 89 vessels), a 416% surge compared to the same period last year (1,486,795 CGT, 18 vessels). In particular, Korea secured 5,444,931 CGT (63 vessels) of this, recording a market share of 71%.