POSCO and Hanwha Ocean are moving to secure a demonstration vessel to apply high-manganese steel—a South Korean-developed cryogenic steel—to liquefied natural gas (LNG) carrier cargo tanks. The two companies announced on October 15 that they signed a memorandum of understanding (MOU) for securing a high-manganese steel cargo tank demonstration vessel at Hanwha Ocean’s Geoje shipyard in South Gyeongsang Province. The signing ceremony was attended by executives from both companies, including POSCO President Lee Hee-geun and Hanwha Ocean CEO Kim Hee-cheol.
The core objective of this collaboration is to establish an independent alternative using South Korean-made materials in the LNG cargo tank technology market dominated by France’s GTT. South Korean shipbuilders have been paying royalties equivalent to a certain percentage of vessel order value in exchange for using GTT’s cargo tank technology. As LNG carrier orders accumulate, the burden of foreign technology fees has compounded. If a domestically developed cargo tank—combining steelmaker-developed materials with shipbuilder design and construction capabilities—is commercialized, this dependence could be significantly reduced.
High-manganese steel is a specialty steel independently developed by POSCO to maintain strength and impact toughness in cryogenic environments below minus 163 degrees Celsius. Compared to INVAR, the nickel alloy steel predominantly used in existing LNG cargo tanks, high-manganese steel uses manganese—an abundantly available resource—as its raw material, giving it advantages in cost competitiveness and supply stability, according to POSCO.
Material Demand Per Vessel Expands Tenfold
This collaboration is significant in that it extends the application scope of high-manganese steel from ship fuel tanks to large cargo tanks. While LNG fuel tanks require approximately 1,000 tons of material per vessel, LNG carrier cargo tanks require more than 10,000 tons per vessel. Successful application would mean a more than tenfold increase in material demand.
The two companies plan to construct a demonstration vessel equipped with high-manganese steel cargo tanks, led by Hanwha Ocean, and verify safety, durability, and operational efficiency under real operating conditions. Through this, they aim to accumulate operational track records that can be presented to global shipowners and establish a foundation for commercialization and order intake. Key POSCO Group affiliates, including POSCO International (047050.KS) and POSCO Flow, will support the acquisition and operation of the demonstration vessel.
High-manganese steel cargo tanks also offer technical advantages. They adopt an independent tank structure that is fabricated separately and then installed on the vessel, which can shorten shipyard construction time compared to conventional methods. The structural rigidity against “sloshing”—the phenomenon where liquid cargo surges and impacts tank walls—is superior, resulting in fewer operational restrictions. The design also allows flexible adjustment of the boil-off rate, from ultra-low to economical levels, according to shipowner requirements.
Extension of Chairman Chang In-hwa’s Material Commercialization Drive
This collaboration is an extension of the high-manganese steel commercialization strategy that POSCO Group Chairman Chang In-hwa has pursued for years. In 2017, while serving as head of POSCO’s Technology Investment Division, Chang led the application of high-manganese steel to the construction of Gwangyang LNG Terminal’s No. 5 tank. That facility was completed in 2019, providing a foundation for verifying the material’s performance.
In 2020, during his tenure as POSCO president, Chang personally met with executives of Daewoo Shipbuilding & Marine Engineering—Hanwha Ocean’s predecessor—to explain the material’s safety and feasibility for ship applications, actively pioneering new markets. Since then, high-manganese steel has been applied to LNG fuel tanks on very large crude carriers and container ships, with cumulative adoption on 51 vessels to date.
The two companies plan to progressively expand the application scope, using the LNG carrier cargo tank demonstration as a springboard. The immediate focus is expanding into offshore energy infrastructure such as LNG bunkering vessels and floating storage and regasification units (FSRUs), with a longer-term vision of entering next-generation energy carrier segments including ethane, ammonia, and liquid hydrogen vessels.
Lee Hee-geun, President of POSCO, said, “Starting with LNG cargo tanks, we will lead the global standard in the eco-friendly ship materials market.” Kim Hee-cheol, CEO of Hanwha Ocean, stated, “We will combine both companies’ technological capabilities to provide cargo tank solutions with safety and economic viability.”
A Test Case for Shipbuilding-Steel Collaboration
This collaboration is viewed as a representative example of South Korea’s shipbuilding industry moving away from foreign technology dependence. In the LNG carrier market, South Korean shipbuilders possess world-class construction capabilities, yet they have remained dependent on GTT for cargo tank technology alone. If high-manganese steel cargo tanks are commercialized after demonstration, it could lead to improved cost structures and enhanced order competitiveness for shipbuilders.
However, securing actual operational track records remains the key challenge. Shipowners tend to be conservative about adopting new technologies, making long-term operational data accumulation through the demonstration vessel a prerequisite for commercialization. How quickly the two companies can secure reliable operational records through construction and operation of the demonstration vessel will likely determine the pace of future market expansion.