News & Media

18 March, 2019

LNG Market News - Japan

(Source: Kaiji Press News 18/Mar/2019)

Series: Rechecking SB market share (Part 3)

Tanker market shares to change thru industrial reorganization

The ongoing industrial reorganization is expected to bring about drastic share changes in the global gas carrier and tanker newbuilding market. An oligopoly of the market by South Korean and Chinese shipbuilding groups is sure to progress in large-size vessels.

[Large-size LNG carriers]

The planned acquisition of Daewoo Shipbuilding & Marine Engineering (DSME) by Hyundai Heavy Industries (HHI) is seen to face difficulties in the examination by the anti-trust law authorities because it will expand its share in the gas carrier market.
For more than 10 years, the market has been virtually controlled by HHI, DSME and another Korean yard Samsung Heavy Industries (SHI). The trio together has carved 80% of the global market. HHI's share will rise to 56% upon its takeover of DSME.
Among non-Korean yards, Hudong-Zhonghua Shipbuilding under the wing of China State Shipbuilding Corp. (CSSC) has been rapidly building up its track records of construction by monopolizing newbuildings for deployment in Chinese projects. In Japan, Japan Marine United (JMU) and Imabari Shipbuilding have entered the market, which had long been controlled by Mitsubishi Heavy Industries (MHI) and Kawasaki Heavy Industries (KHI).

[Large-size LPG carriers]

Large-size LPG carriers are in a state of oligopoly market. Only Korea's HHI and DSME and Japan's MHI and KHI had built such vessels until China's Jiangnan Shipyard and Japan's JMU branched out into the market in recent years.
At present, HHI overwhelms the others in construction volume. It built some 70 vessels in the past five years, taking 60% of the global market. Its takeover of DSME will boost its share to 76%, which may pose a bottleneck in the examination by the competition law authorities.

[VLCC]

HHI and DSME are the world's two biggest VLCC builders. Their integration will expand HHI's share to 48%. Ranking third and fourth are Dalian Shipbuilding Industry (DSIC) and Shanghai Waigaoqiao Shipbuilding (SWS), affiliated respectively with state-run China Shipbuilding Industry Corp. (CSIC) and CSSC. If the two groups are merged, the surviving group will have a global share close to 30%.

[Suezmax tankers]

Suezmax is a unique market where builders are quite limited. While HHI is competitive here, China's privately-run New Times Shipbuilding commands a large market share. HHI's share will exceed 50% after its takeover of DSME.

[Aframax tankers]

Japanese yards boast their presence in the market, where the construction volume has been relatively small in recent years. The Sumitomo Heavy Industries (SHI) group ranks second in the world, however, SHI is the top individual builder, as the first ranked position is taken by combined yards of CSSC and CSIC. Namura Shipbuilding builds about an equal number of Aframax tankers.
The world's biggest builder is China's CSSC. Aframaxes are built by its Guangzhou Longxue Shipbuilding, Guangzhou Shipyard International (GSI) and SWS. Korean yards have built fewer Aframaxes in recent years. When they built ones, they focused on value-added models having shuttle tanker and product carrier specs.

[MR-type PCs]

Hyundai Mipo Dockyard (HMD) of the HHI group overwhelms peers in 40,000-dwt-class PCs. It has built about 240 out of some 380 units completed worldwide in the past five years.
GSI affiliated with CSSC is a strong contender in China. In Japan, MR PCs are built by Onomichi Dockyard and Shin Kurushima Dockyard.
Midsize Korean yards led by STX Offshore & Shipbuilding and SPP Shipbuilding had once enjoyed larger market shares in MR PCs. How market shares will change following their collapse is now a focus of industry attention.

[SR-type chemical tankers/PCs]

PCs and chemical tankers are segmentalized by category depending on cargo handled, specs and type. They are dealt with as a single category for a market share analysis.
Japanese yards are competitive in this market. Holding the biggest share is Fukuoka Shipbuilding which has taken over Usuki Shipyard. Kitanihon Shipbuilding ranks second. Four of the world's top five are Japanese yards.
Especially, chemical tankers with stainless steel tanks have so far been built mainly by Japanese yards. Recently, however, Chinese yards have forayed into the market one after another. Aviation Industry Corp. of China (AVIC) is expanding the construction of such tankers at its Dingheng Shipbuilding.

SB tanker-share-190318

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