A single historic order was placed in East China, indicating that China's shipbuilding industry has made outstanding technological progress in the LNG carrier, a high-cost, high-quality ship type.
The Zhitong Finance App learned that China Merchants Securities released a research report saying that on April 29, China Shipbuilding Group Co., Ltd. and Qatar Energy Company (QatareEnergy) held a signing ceremony for the construction of 18 of the world's largest 271,000 cubic meter Q-Max liquefied natural gas (LNG) carriers. A single historic order was placed in East China, indicating that China's shipbuilding industry has made outstanding technological progress in the LNG carrier, a high-cost, high-quality ship type. Considering that Hudong Zhonghua is the core sub-shipyard of the China Shipbuilding Group, other CSIC companies will also benefit from the gradual industrialization and localization process of LNG carriers.
Looking at the overall shipping market, since 2024, the shipping market has also continued to maintain a positive boom. In January-March, the world signed 29.09 million new orders, up 17.2% year on year, and the new shipbuilding price index continued to rise. In March, the price indices for bulk carriers and tanker containers rose 4 points, 5 points, and 1 point to 170 points, 216 points, and 113 points, respectively. We continue to strongly recommend China Shipbuilding (600150.SH). We recommend focusing on industrial chain companies such as China Dynamics (600482.SH) and China Shipbuilding Defense (00317).
The order indicates that China's shipbuilding industry has made outstanding progress in the LNG carrier, a high-net-worth ship market
From the perspective of technical difficulty, the 271,000 square meter ship type ordered has a 57% increase in carrying capacity compared to conventional 174,000 square meter LNG carriers, making it more difficult to manufacture; in terms of energy consumption in tons and nautical miles, it is 9.9% lower than that of 174,000 square meter LNG carriers; and the carbon intensity index (CII) is 23% lower than that of 174,000 square meters of LNG carriers. Hudong Zhonghua Energy has reaped benefits from orders for large cargo loads, low energy consumption, and large quantities of LNG carriers, indicating that its manufacturing capacity has reached a cutting-edge level in this field.
China's shipyards are expected to achieve faster progress and a higher share in the field of LNG carriers in the future
Currently, not including the latest 18 orders, Hudong-China LNG carriers have a total of 41 orders, second only to South Korea's Hanwha Marine (77 ships), Samsung Heavy Industries (74 ships), and Hyundai Heavy Industries Ulsan Shipyard (68 ships), ranking first in China and fourth in the world. In addition to East China, China's other shipyards have also frequently received orders for LNG carriers in recent years. Most of them have broken through 0, such as Jiangnan Shipbuilding, Dalian Shipbuilding Heavy Industries, Yangzi Xinfu, and China Merchants. In contrast, in the past three years, Korean companies still had a high share of the LNG carrier market: Hyundai Heavy Industries (about 23%), Samsung Heavy Industries (about 21%), Hanwha Marine (about 19%), and Hyundai Samho (about 14%). Along with the improvement of China's LNG carrier shipbuilding capacity, the global share is expected to increase further.
According to China Merchants Securities, new orders for LNG carriers have grown rapidly in the past two years, and global deliveries are expected to increase significantly in 2025, and delivery of high-net-worth vessels will support the performance of shipping companies. According to Clarkson's statistics, new orders for global gas carriers (mainly LNG carriers) once reached 536.7 or 2.476 million revised tons in 2022 and 2023, far exceeding the historical average (basically below 1 million revised tons per year).
As a result, LNG carriers are expected to gradually reach a peak in delivery in 2025. As a high-net-worth ship, the new construction price has continued to strengthen in recent years (the cost of 174,000 square meters of LNG carriers has risen from 190 million US dollars in 2020 to more than 240 million US dollars now). As a result, China Merchants Securities believes that the signing of the LNG ship order will significantly improve the subsequent performance of China's shipyards.
Risk warning: The downstream shipping market continues to be sluggish, and recovery falls short of expectations; raw material prices continue to rise, labor costs continue to rise; risk of exchange rate fluctuations.