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Natural gas

Korean Shipbuilders Expected to Win More LNG Ship Orders Amid Russia-Ukraine Conflict

Strategic Insights

— 1 min read

Korean shipbuilding companies saw a surge in stock prices as investors bet on increased demand for liquefied natural gas (LNG) ship orders, driven by the escalating Russia-Ukraine military conflict. The clash has raised concerns about Europe's dependence on Russian natural gas, leading to a potential shift towards importing more LNG via ships. As a result, Korean shipbuilders like Hyundai Heavy Industries, Daewoo Shipbuilding and Marine Engineering (DSME), and Samsung Heavy Industries are expected to benefit from the growing demand for LNG carriers.

Key Takeaways:

  • Natural gas prices have increased sharply due to Germany's decision to halt the Nord Stream 2 pipeline project and concerns about Russia's potential halt of natural gas supplies through Ukraine.
  • European countries are likely to increase LNG imports via ships to reduce their dependence on Russian natural gas, which will boost demand for LNG carriers built by Korean shipyards.
  • Korean shipbuilders expect to benefit from the Russia-Ukraine conflict, but the impact will be felt in the long term due to the industry's multi-stage, long-term process.
  • The proportion of LNG exports via ships is expected to increase in the future, with Russia's share in the LNG export market set to grow from 8.3% to a potentially significant level.
  • Hyundai Heavy shares closed at 109,500 won, up 7.35% from Tuesday, while DSME shares ended at 27,000 won, up 21.9%, and Samsung Heavy shares closed at 5,930 won, up 6.65%.

Statistics:

  • Russia accounts for 16.5% of the world's natural gas production, but only 8.3% of the LNG export market.
  • The LNG export market is expected to shift towards ship-based imports as European countries look to reduce their dependence on Russian natural gas.
  • It takes 1.5 to 2.5 years to build a ship, making the shipbuilding industry a long-term business.
  • Ammonia hydrogen carrier investments are also being made by companies, which will require additional orders for LNG carriers.

Sources:

  • Han Young-soo, analyst at Samsung Securities, as quoted in the report.
  • Spokesmen from Hyundai Heavy Industries, Daewoo Shipbuilding and Marine Engineering (DSME), and Samsung Heavy Industries.

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