Chinese shipyards are expanding their production capacity for high value-added ships such as liquefied natural gas (LNG) carriers.
China’s largest shipbuilder Hudong-Zhonghua Shipbuilding, which is a subsidiary of China State Shipbuilding Corp. (CSSC), announced a plan to double its LNG carrier production capacity in a business plan announced at the beginning of 2023, according to foreign media outlets and industry sources on Feb. 6.
Hudong-Zhonghua Shipbuilding is currently working on the expansion of the Changxing Shipbuilding Base near Shanghai, China. When the expansion is completed, the company’s LNG carrier production capacity is expected to jump from five to six vessels per year to 10 to 12 vessels per year.
Other Chinese shipbuilders are also preparing to build LNG carriers. Dalian Shipbuilding and Jiangnan Shipbuilding started taking orders for LNG carriers in earnest.
Abundant labor supply lies behind Chinese shipyards’ ability to ramp up their production capacities. They can aggressively expand production capacities as they can recruit workers on time in line with a recent increase in global shipbuilding orders.
China’s LNG carrier orders have grown eightfold from 460,000 CGT in 2021 to 4.4 million CGT in 2022, Clarkson Research said. During the same period, orders awarded to Korean shipyards increased by 73 percent to 10.12 million CGT.
Although China is in hot pursuit of Korea in the LNG carrier market, Korean shipbuilders have no plan for production capacity expansion, with the worker shortage being one of the reasons. The LNG carrier order intake that Korean shipyards can digest annually is estimated to be around 60 units – 24 for Korea Shipbuilding & Offshore Engineering (KSOE), 20 for Daewoo Shipbuilding & Marine Engineering (DSME) and 20 for Samsung Heavy Industries.