DS Investment Securities forecast the LNG carrier ordering boom will continue through at least 2032, driven by 174 global LNG projects and aging fleet replacement demand. Analyst Kim Dae-sung stated in a report on the 16th that annual demand will average 90-110 vessels through 2032 when combining project requirements and scrapping of vessels over 20 years old. Korean shipbuilders Samsung Heavy Industries, HD Hyundai Heavy Industries, and Hanwha Ocean received $15.26 billion in orders during the first half of this year, with HD Hyundai achieving 59% of its annual target and Samsung Heavy reaching 66%. The sustained demand stems from a record-high 174 global LNG projects as of the second quarter — 53 under construction, 27 in basic design, and 94 in proposal stage — combined with replacement needs for approximately 120 steam turbine vessels exceeding 20 years of age.
174 Global LNG Projects Drive Demand Through 2032
Global LNG projects reached 174 as of the second quarter this year, a record high. DS Investment Securities reported 53 projects under construction, 27 in basic design, and 94 in proposal stage. The firm calculated that projects in basic design expected to reach final investment decision in 2026-2027 will require an average of over 90 LNG carriers annually through 2032.
Aging fleet replacement adds to order demand. A total of 64 LNG carriers were scrapped this year, all steam turbine vessels over 20 years old. Approximately 120 steam turbine vessels globally have exceeded 20 years of service, creating replacement demand of 10-20 vessels annually over the next five years according to the analysis.
Korean Shipbuilders Exceed First-Half Order Targets
The three Korean shipbuilders received $15.26 billion in commercial vessel orders during the first half. HD Hyundai Heavy Industries achieved 59% of its annual target and Samsung Heavy Industries reached 66% in the first half, raising the possibility of exceeding full-year targets.
By vessel type, HD Hyundai Heavy Industries secured 14 very large gas carriers and 12 LNG carriers, concentrating on gas vessels. Hanwha Ocean received orders for 6 LNG carriers and 14 tankers. Samsung Heavy Industries secured 13 LNG carriers.
Second-Half Orders and Prices Expected to Rise
Orders are forecast to increase further in the second half based on US LNG projects. Large-scale orders of approximately 20 vessels each are anticipated from Woodside, ExxonMobil, and Venture Global.
Competitor China has filled 60-70% of its 2029 delivery slots, and Hudong-Zhonghua, which has LNG carrier construction experience, has secured about half of its 2030 slots according to the assessment. This indicates the possibility of easing low-price order competition from Chinese shipbuilders.
Korean shipbuilders' LNG carrier order prices are forecast to rise from $250-254 million per vessel in the first half to $256-257 million in the second half. The three shipbuilders maintain high foreign exchange hedging ratios, and won-denominated ship prices continue to rise, which is assessed to lead to future revenue and profitability improvements.
DS Investment Securities Forecasts Q2 Earnings Growth
Second-quarter results are expected to show significant growth. DS Investment Securities forecast Samsung Heavy Industries' second-quarter operating profit at 375.3 billion won, up 83.2% year-over-year. HD Hyundai Heavy Industries is estimated to record 977.5 billion won, up 125.4%, and Hanwha Ocean 554 billion won, up 49.1%. The analysis attributed profitability improvements to revenue recognition of high-priced orders and increased gas carrier proportion.
Analyst Kim assessed Samsung Heavy Industries as the most undervalued among large Korean shipbuilders. He noted the possibility of orders for high-profit vessel types including floating LNG production facilities and floating data centers. He maintained a 'buy' investment opinion and target price of 42,000 won for Samsung Heavy Industries.
FAQ
How many global LNG projects exist as of the second quarter this year?
Global LNG projects totaled 174 as of the second quarter, comprising 53 under construction, 27 in basic design, and 94 in proposal stage.
What were the first-half order results for Korean shipbuilders?
Samsung Heavy Industries, HD Hyundai Heavy Industries, and Hanwha Ocean received $15.26 billion in commercial vessel orders during the first half. HD Hyundai achieved 59% of its annual target and Samsung Heavy reached 66%.
