China Closes In on South Korea in LNG Carrier Market

South Korea's shipbuilding industry has long dominated the liquefied natural gas (LNG) carrier market, but China is now rapidly narrowing the gap. According to Clarksons Research, Chinese shipbuilders secured 19 of the 55 LNG carriers ordered globally in the first half of this year, capturing a 34.5% market share.

This far exceeds the 25.1% average share recorded over the past three years, with South Korea maintaining its top position but losing ground to China. In contrast, data from shipbroker Banchero Costa paints an even more urgent picture: as of early July this year, China's LNG carrier order backlog stood at 34 vessels, surpassing South Korea's 32.

The drivers of China's pursuit are government-led low-interest financing and price competitiveness, with labor costs approximately 8% lower than those in South Korea. Chinese shipbuilders have also aggressively invested in facility expansions, including Hudong-Zhonghua Shipbuilding's $2.7 billion investment last year to increase its annual LNG carrier construction capacity from six to ten vessels.

South Korean shipbuilders face a 'capacity dilemma', with limited land availability and orders for other types of ships flooding their docks. In response, they are pursuing a dual-track strategy separating general vessel types from high-value-added vessels like LNG carriers.