Significantly More Expensive
In a resurgence of the Korean shipbuilding industry, Samsung Heavy Industries has secured a massive order worth nearly 4 trillion won. This is the largest single contract for a ship in the domestic market.
Samsung Heavy Industries announced on July 17 that it had secured an order for 16 16,000 TEU (1 TEU is equivalent to one 20-foot container) methanol-powered container ships from an Asian shipowner for 3.9593 trillion won (US$3.1420 billion). This contract represents 67% of Samsung Heavy Industries’ total sales last year (5.9447 trillion won).
These container ships will be delivered to the shipowner as they are completed by Dec. 31, 2027. The company placing the ship order is known to be Evergreen Marine, a Taiwanese shipping company.
With this order, Samsung Heavy Industries has achieved 66% of this year’s order target (9.5 billion dollars). The total number of ships ordered this year is 25. Consequently, the backlog of Samsung Heavy Industries has ballooned from US$29.5 billion at the end of last year to US$33.6 billion, reaching its highest level in eight years since 2015’s US$35.4 billion. The six docks at Geoje shipyard are currently packed with various ships under construction.
The shipbuilding industry has focused on the fact that the fuel of the ordered ships is “methanol.” Methanol can reduce sulfur oxide emissions by 99%, nitrogen oxide by 80%, and carbon dioxide by more than 20% compared to traditional bunker C oil, the conventional ship fuel.
Naturally, the price per vessel is also about 20% higher, and methanol-powered ships are considered high-value-added ships. They are more expensive than environmentally friendly LNG-powered ships. The price per vessel for the LNG-powered container ships that Samsung Heavy Industries ordered from Evergreen in 2021 and the methanol-powered ships this time are 140.5 billion won and 247.5 billion won, respectively. Although there are differences in ship size and exchange rates at the time of contract, methanol-powered ships are still significantly more expensive.
With the world’s number one shipping company, MAERSK, declaring that it will focus on securing and operating methanol-powered ships in the future, orders for methanol ships are expected to increase significantly. In a survey conducted last month by the International Council on Combustion Engines (CIMAC) among shipowners, the highest proportion of respondents, 37%, selected methanol as the most likely ship propulsion fuel for 2045.