Chinese shipyards are sweeping up orders for methanol-powered ships, an eco-friendly, low-carbon type of vessel, as South Korea’s shipbuilding industry seeks to take orders for high-value vessels. In particular, China is expanding orders based on its capacity to produce and supply methanol, raising concerns that China will catch up with South Korea, which is still ahead of China in building capacities and technology.
Chinese shipbuilders won orders for a total of 18 methanol-powered ships in January this year, according to Clarkson Research, a British shipbuilding and shipping market analyst. By ship type, container ships accounted for the overwhelming majority with 14 vessels. On the other hand, South Korea’s three major shipbuilders -- HD Korea Shipbuilding & Marine Engineering, Samsung Heavy Industries, and Hanwha Ocean -- have not received any orders for methanol-powered ships since July 2023.
The lack of orders for methanol-powered vessels given to South Korea is due to the fact that the three shipbuilders have been selectively landing orders for smaller, higher-value-added vessels. For shipbuilders that currently have three to four years’ worth of backlog orders and need to utilize their docks efficiently, it is burdensome to take orders for methanol-powered container ships that take up a large amount of dock space. In the case of container ships, shipping companies tend to order more than six to eight ships at once, which lowers ship prices.
However, it is expected that the gap will narrow as China accumulates experience in building methanol-powered ships. In particular, unlike South Korea, which imports all of the methanol that it needs, China is utilizing its own methanol production and supply capabilities before placing orders, raising concerns for Korea. “Compared to five years ago, Chinese shipbuilders have more advanced capabilities in building methanol-powered ships that can satisfy clients,” said Kim Yong-hwan, a professor of shipbuilding and marine engineering at Seoul National University. “If China continues to win orders, China will be able to overtake South Korea in methanol-powered ships.”