According to Clarksons Research, the benchmark newbuilding price for an LNG carrier stood at $245 million as of Oct. 23, down from $248 million in October last year. Prices for ultra-large container ships also fell over the same period, from $266.5 million to approximately $242 million. China's expansion in high-end shipbuilding is seen as a key factor behind the decline.
What Happened
Despite LNG carrier orders increasing more than 4.5-fold year-on-year, newbuilding prices have declined. Clarksons data shows benchmark prices for both LNG carriers and ultra-large container ships are lower than a year ago.
Chinese shipyards are intensifying competition in the premium vessel market. Yangzijiang Shipbuilding, previously focused on medium-sized vessels, has been securing more orders for ultra-large container ships. Hengli Heavy Industries is targeting the LNG carrier market through a build-first, sell-later strategy. Jiangnan Shipyard has secured LNG carrier orders at $225 million per vessel, below the prevailing benchmark, challenging South Korean shipbuilders' market share.
South Korean shipbuilders are unlikely to see an immediate earnings impact, as this year's results largely reflect vessels ordered at peak prices about two years ago. HD Korea Shipbuilding & Offshore Engineering's third-quarter operating profit is projected to rise 50.5% year-on-year, while Hanwha Ocean and Samsung Heavy Industries are expected to record profit growth of 86.5% and 8.9%, respectively. However, a prolonged decline in newbuilding prices could erode profitability once the backlog of higher-priced orders is delivered.
Background
Large numbers of vessels ordered since 2022 are entering service, while major LNG production projects, including Qatar's North Field East, have experienced delays. With shipping capacity expanding ahead of available cargo volumes, shipowners have less incentive to pay premium prices for new vessels. Mismatches between ship deliveries and LNG project schedules are also limiting price recovery.
Industry experts say South Korean shipbuilders need to accelerate technological development and business diversification to maintain their competitive edge over Chinese rivals. The period around 2029, when the quality and performance of vessels built by newer Chinese entrants become clearer, could prove a critical test of competitiveness. Korean shipbuilders are expanding beyond conventional commercial vessels into higher-value businesses, including small modular reactor (SMR)-powered ships, offshore power generation facilities and floating liquefied natural gas production (FLNG) units.
Impact on Shippers
The decline in newbuilding prices has limited direct impact on cross-border shippers, but may feed through to ocean freight costs via capacity supply in the medium to long term. Lower prices for LNG carriers and ultra-large container ships reflect changes in shipowners' ordering appetite, which could affect the pace of fleet renewal and capacity expansion.
For shippers on China-US routes, if shipowners slow newbuild ordering due to lower prices, long-term capacity growth may decelerate, and peak-season space tightness remains a risk to watch. At present, freight rates are more influenced by immediate supply-demand conditions and tariff policies; newbuilding price signals can serve as a reference for medium- to long-term capacity assessment.
Recommendations
Shippers are advised to monitor carriers' capacity deployment and route adjustments, and plan peak-season space in advance based on their own cargo volumes. For long-term contracts, pay attention to flexibility in rate terms to avoid locking in excessive costs during capacity fluctuations. Meanwhile, maintain communication with freight forwarders and carriers to stay informed of route and space changes.