Korean shipbuilders await improved earnings as LNG carrier price hit all-time high

South Korean shipbuilders, which have secured almost 97% of the orders placed for liquefied natural gas (LNG) carriers this year, expect to see their earnings improve as LNG carrier price hits an all-time high in six years.

According to the global market researcher Clarkson Research Service on Sept. 18, the average price for a 174,000-cubic-meter LNG carrier recently touched around $200 million for the first time since 2015 when it logged a record-high price of $275 million.

Since 2017, LNG tanker prices have not moved much. However, the growing demand for LNG as an eco-friendly fuel has led to steady growth in LNG carrier prices. This year alone, the price of LNG carriers increased by 9.9% compared to the beginning of the year.

While the increase rate may be on the lower end compared to the 13% growth rate of the Clarkson Newbuilding Price Index, it’s still considered high given that the decline rate of LNG carrier price has been low compared to other vessel types such as container ships and bulk carriers.

As LNG carrier price increases, domestic shipbuilders are looking forward to their earnings outlook. According to Clarkson Research, Korean shipbuilders have won orders for 37 large LNG carriers out of the 38 orders placed globally.

Moreover, additional orders for large LNG carriers are expected from Qatar and Russia in the second half of the year.

The contracts were mostly secured by Korea's "Big Three" -- Korea Shipbuilding & Offshore Engineering Co. (KSOE), Samsung Heavy Industries Co. and Daewoo Shipbuilding & Marine Engineering Co.

“Korea’s major shipbuilders have already secured two years' worth of order backlogs,” said a shipbuilding industry official, adding that the ship price uptrend is likely to carry over to improved earnings.

Write to Jung-hwan Hwang at jung@hankyung.com
Danbee Lee edited this article.