Order for 80 VLGC/VLAC ships this year... Received order for 56 ships from Korean shipbuilder
Delivery of contract quantity until 2030... Demand for replacement of old ships is also pending.
The ultra-large gas carrier market is heating up again. Orders for very large LPG carriers (VLGC), which were limited to 14 last year, increased to 80 ships this year, including very large ammonia carriers (VLAC), of which 70% went to Korean shipbuilders.
Freight rates also rose to an all-time high. The delivery date of the newly contracted ships has been delayed until 2030. As exports of American LPG to Asia increase and demand for replacement of old ships continues, it is predicted that orders for gas ships may last longer than expected.
5.7 times in one year since ordering… Won 70% of orders from Korean shipbuilders
According to the shipbuilding industry and SK Securities on the 7th, the number of VLGC and VLAC ordered this year was 80. SK Securities analyzed that compared to last year's order volume of 14 VLGC ships, this year's order size has increased by more than 5.7 times.
Among the orders placed this year, Korean shipbuilders received orders for 56 ships, accounting for 70% of the total. HD Hyundai Heavy Industries secured the most with 26 ships, followed by HD Hyundai Samho with 18 ships, and Samsung Heavy Industries and Hanwha Ocean with 6 ships each.
Among the 192 VLGC and VLAC ships ordered around the world from 2023 to this year, Korean shipbuilders received 129 ships, or 67%. During the same period, China received orders for 49 ships.
The increased orders are also confirmed in the remaining construction schedules of domestic shipbuilders. The delivery time for the quantity ordered by HD Hyundai Heavy Industries in July is scheduled to be delivered between October and December 2029, and the vessel contracted by HD Hyundai Samho in August is scheduled to be delivered between January and May 2030.
Last month, Hanwha Ocean received an order worth 477.8 billion won for three VLGC ships from a shipowner in Oceania. The contract period runs until December 2030. Samsung Heavy Industries also received an additional order for two VLGCs worth 307.4 billion won at the end of last month and plans to deliver them by February 2030.
Samsung Heavy Industries' merchant ship orders this year have increased to $7.5 billion, including this contract. This corresponds to 132% of the annual target of $5.7 billion.
Highest fare ever... Even a 19-year-old used ship has a high price.
As orders for gas ships increase, freight rates are again at their highest level. According to Clarkson Research, a British shipbuilding and shipping market analysis agency, VLGC freight rates on the US Gulf Coast-Japan Chiba route rose to their highest level ever in September. The average freight rate in the second quarter of this year also reached an all-time high.
As exports of American LPG to Asia have increased, transportation distances have also become longer. The average transportation distance per ton of LPG is expected to increase by about 19% from 5,738 miles last year to 6,819 miles this year. India's LPG imports are also expected to increase from 24.3 million tons last year to 33.6 million tons in 2028.
Used boat prices also remain high. Last month, VLGCs built by HD Hyundai Heavy Industries in 2007 and 2009 were traded for $77 million and $74 million, respectively. The price of VLGC, which is around 19 years old, is about 67% of the price of a new ship. Among LPG carriers, the proportion of vessels over 20 years old is approximately 17%.
The growth rate of transportation demand is expected to exceed the growth rate of fleets in 2027 and 2028, when new ship deliveries are concentrated. In 2027, the VLGC/VLAC ton mile growth rate is expected to be 17.4% and the LPG carrier fleet growth rate is expected to be 11.3%. In 2028, they are expected to be 9.8% and 7.1%, respectively.
The latest contracts for domestic shipbuilders are already for delivery in 2030. The VLGC ordered by Samsung Heavy Industries last month is scheduled to be delivered by February 2030, and the three ships ordered by Hanwha Ocean are scheduled to be delivered by December of the same year. Orders for gas ships have increased rapidly this year and are filling the construction schedule four years from now.
