Figures published by Clarkson Research Services at the start of September indicated that South Korean yards secured orders for 23 vessels, with a compensated gross tonnage (CBT) of 630,000, representing 73% of global orders. By contrast China had 24% of orders, with 12 vessels.
However, global demand has been hit heavily by Covid-19, with orders between January and August this year only reaching 54% of 2019 levels. Moreover, it has been bolstered by bookings for LNG carriers, a ship type for which South Korea continues to leverage its significantly greater expertise over the Chinese yards.
This superiority was evinced in June when Korea’s ‘Big Three’ shipyards – Hyundai Heavy Industries (HHI), Samsung Heavy Industries (SHI) and Daewoo Shipbuilding & Marine Engineering Co (DSME) – secured a US$19.2 billion deal to build 100 LNG carriers for Qatar Gas through to 2027, while CSSC-owned Hudong-Zhonghua Shipbuilding were awarded contracts for a more modest 16 units.
Among the other orders, Korea Lines has booked two LNG carriers from HHI, due for delivery in 2023 and under long-term charter to Shell. They comprise an option Shell has exercised on a previous contract for two vessels to be delivered in 2022 by sister company Hyundai Samho Heavy Industries (HSHI) and will join the fleet of Korea Lines’ recently-formed subsidiary Korea LNG Shipping. Additionally, HHI and HSHI signed deals for two carriers each from unnamed Bermudan and European owners respectively.
Elsewhere, there are conflicting reports concerning 10 Arc7 ice class LNG carriers placed by Russian gas producer Novatek and Sovcomflot for the country’s Arctic LNG 2 project. Having previously built 15 such vessels for the Yamal LNG project between 2016 and 2019, DSME appeared to be ideally placed to win further orders.
However, Russia is keen to develop its own shipbuilding capabilities and previously placed bookings for five such vessels from the Zvezda yard in late 2019 and early 2020.
To help Zvezda achieve the necessary expertise, last year it signed a technical cooperation deal with SHI to assist with construction. But there are concerns about both Zvezda’s abilities to achieve the necessary standards and the capacity for additional orders, leading Russia to soften its stance on homegrown shipbuilding. It now seems likely that SHI, DSME, or a combination of the two will win the order for the 10 vessels, with a decision on the US$3 billion deal expected by the end of September.
HHI granted AiP
South Korea’s pre-eminence with membrane gas containment technologies, as opposed to the Moss (Type B) favoured by Japanese shipyards, has put them in good stead over the last five years given its superior storage capacity (up to 40% greater). But they also have the upper hand with regard to stringent requirements of LNG fuel supply systems, with all the Big Three having their own proprietary technologies.
In September, HHI took that evolution a step further when it was awarded an AiP by Lloyd’s Register for its Digital Health Management (DHM) system for a Type B fuel tank following a joint development project between the two parties. The system, dubbed Hyundai Prismatic Independent IMO Type B Tank eXcellence (HiPIX), is a suite of software that uses sensor-based digital twin technology to generate real-time insight into the structural safety of the tanks.
The insights into the condition of tank components will allow owners to obtain survey credit and should lower through-life costs. It will be deployed for the first time onboard the world’s first dual-fuelled ultra-large container ships, which are currently under construction at Hyundai Samho Yard for Eastern Pacific Shipping.
Meanwhile, DSME remains in the midst of the long running saga concerning its proposed megamerger with HHI. The latest hurdle was cleared in August when it received clearance from the Competition and Consumer Commission of Singapore, but in July the European Commission’s probe has suffered a number of setbacks in its data collection due to Covid-19, and it’s unclear whether a decision will be reached this year.
Given Europe’s limited capacity for shipbuilding, experts think it’s likely that approval will be granted with caveats restricting the merged entity’s further expansion. However, the deal will still require the approval of China, which has hitherto remained silent on the matter, and Japan, which filed a complaint to the World Trade Organisation in February.