New shipbuilding contracts which worth a total of 28.46 million CGT will be signed around the world during 2019. In comparison, the amount for 2018 was 28.55 million CGT. Namely, last year, contracts for building LNG carriers increased by 400%, reaching 5.85 million CGT (76 ships). However, the numbers are expected to be less, going to to 4.08 million CGT and 53 ships.
Despite this fact, South Korean shipbuilders will be awarded several new contracts for large ships, including LNG carriers, oil tankers and container ships. According to local media, this will happen because many large ships are near the end of their service lives.
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In fact, 20% of oil tankers, 15% of container ships and 14% of bulk carriers will be at least 20 years old in the next five years. The ratio becomes 19% for MR product tankers, 21% for VLCCs, and 20% for Suezmax tankers.
Before this growth, South Korean shipbuilders had a rough time regarding new orders in 2016. Nevertheless, last year, they accounted for 42% of new shipbuilding contracts in the global market. This gave them the chance to beat Chinese shipbuilders and rank again among the top in six years. The fact that more shippers preferred large ships for factors such as fuel efficiency played a key part.
What is more, the 2020 sulphur cap could be a positive thing for Korean shipbuilders, as ship owners will have to use low-sulphur oil, scrubbers, or LNG ships. The first option is considered the easiest but more expensive, with scrubbers taking the lead. Nonetheless, local media reported that installing scrubbers on an existing ship is more expensive than installing them on new ships. This could increase ship orders, with LNG-fueled ships expected to be in high demand for 2019 as well.
