Since the beginning of this year, LNG carrier newbuilding market has witnessed exciting boom after long-time dreariness. It catches the eyes of market players in the overall bearish shipbuilding market.
Due to the global LNG projects delays and decreasing LNG carrier freight rates brought by capacity surplus in 2007, LNG carrier went through serious setback in the next three years. Till 2011, with the global economic recovery and LNG shipping growing, LNG carrier orders see great increase. Till the middle of July, 25 LNG carriers have been ordered globally, five times of the volume in 2008.
Generally, following few factors drive the prosperity of LNG carrier orders.
The Soaring crude oil price in the first half of 2011 pushes some players to shift focus on LNG as an alternative. In April, Greek shipowner Angelicoussis changed an original VLCC to a 15.6K CBM LNG carrier at DSME despite of higher cost.
Besides, former delayed LNG projects were continuously re-launched in Qatar, Australia, Brazil and Russia, etc. S which would greatly boost long-term considerable demand for LNG carriers as well as new larger ship type development.
As typical high-value, high-tech and high-difficulty ship type, LNG carrier is regarded as the criterion of a country’s shipbuilding value. The high profit for LNG carrier newbuilding attracts many shipbuilders to the market. As a result, the current LNG newbuilding price has declined by 20% against that of 2008 high. The low price, the bullish LNG shipping market together with the rising freight rates make LNG carrier orders especially charming to players.
Moreover, the earthquake, tsunami and the consequent Fukushima nuclear leak accident gave rise to people’s caution in using nuclear energy. As the alternative, Japan’s demand for LNG further pushes the warming up of LNG carrier internationally.
In the current LNG carrier newbuilding market, S. Korea is the proverbial No.1 and monopolize the market by winning 92% of the total orders.
Although Japan developed LNG carriers earlier than S. Korea, its disadvantages in price and delivery period made it lag behind S. Korea in recent years. Korean shipyards have dominated the sector for the last ten years.
As a new competitor, Chinese shipyards also enter LNG carrier R&D market, such as Hudong-Zhonghua Shipyard, Rongsheng Heavy Industry and New times Shipbuidling. As early as 1997, Hudong-Zhonghua has began to develop LNG carriers and got its first export order from MOL in last December, which is the first export LNG carrier new order for Chinese shipyards. 
With the growing shipping demand, large-scale vessels are increasingly preferred considering cost and efficiency. However, it does no mean that the larger the better. Taking terminal handling capacity, port draft and LNG the handling capacity of the vessel into account, LNG carriers of 130k-170k CBM are expected to lead the market in long term.
Apart from the changes in vessel size, its propulsion system is also in continuous revolution. The traditional propulsion is steam turbine which could use LNG vapor conveniently. However, diesel-electric propulsion, low-speed diesel engine and gas turn are beginning to replace steam turbines for high-efficiency and high-operability.
Nevertheless, with the growing demand for LNG carriers, speculative investment in the sector is also on the rise, the first pick-up after the peak season in 2003-2004 for LNG. Many shipowners ordered LNG carriers without signing any long-time chartering contract.
Some insiders warn speculator against overheat market due to surplus speculative orders, especially in current globally volatile financial environment.