Very large LPG carrier built by Hanwha Ocean. /Hanwha Ocean
Hanwha Ocean (042660.KS) has won a contract to supply three vessels, helped by rising freight rates for very large gas carriers (VLGCs).
The company said on the 1st that it received the order for three VLGCs from a shipowner in Oceania.
The contract is valued at 477.8 billion won ($344 million), with delivery scheduled for around December 2030.
Shifting supplies of liquefied petroleum gas (LPG) lie behind the order. Middle East LPG supplies have declined as war in the region disrupted passage through the Strait of Hormuz. Asian LPG buyers are replacing those volumes with U.S. cargoes. As shipments of U.S. LPG to Asia increase, voyage distances have lengthened, pushing VLGC freight rates higher and prompting shipowners to order more newbuildings.
Demand for VLGCs has risen further as El Nino, a warming of the eastern Pacific near the equator, has constrained transits through the Panama Canal and forced vessels to detour around the Cape of Good Hope. “Energy supply from the Middle East is set to recover slowly, and the Panama bottleneck has deepened,” said Ahn Do-hyun, an analyst at Hana Securities. “It is an environment in which VLGC freight rates cannot but rise structurally.”
With this order, Hanwha Ocean has booked 32 contracts worth a combined $5.94 billion (about 8.14 trillion won) so far this year.
By vessel type, very large crude carriers (VLCCs) accounted for the largest share at 17 ships, followed by six liquefied natural gas (LNG) carriers, three very large ammonia carriers (VLACs), three VLGCs, one wind turbine installation vessel (WTIV), one special-purpose vessel and one onshore plant.
Hanwha Ocean plans to improve profitability by being selective in taking orders, focusing on high-value vessels such as tankers and gas carriers. “We have secured more than three years of work, which puts us in a position to take orders centered on higher-margin vessel types,” a company official said.