“The LNG market has been slowly recovering from virtually zero orders from late 2008 to early 2010...and the nuclear crisis in Japan will obviously boost further growth,” Hwang Tae-jin, executive vice president at Daewoo, said.
Daewoo shares have risen more than eight percent since the March 11 earthquake as Japan’s anticipated increase in demand brews hopes for rising LNG ship orders, say analysts. The overall market has risen 6 percent in the same period.
Daewoo, the world’s No 1 LNG vessel manufacturer, is now participating in tenders to supply LNG ships to Russian and European firms, Hwang said, adding that overall LNG ship orders could grow to around 15 to 20 ships annually starting this year.
“LNG demand is rising and charter rates are also going up,” Hwang said in the aftermath of Japan’s nuclear crisis.
Although the LNG spot market is not huge because most LNG projects are based on long-term contracts, Hwang said, speculative orders for LNG vessels may start to emerge.
Increasing LNG demand after Japan’s nuclear crisis would lend support to rising ship supplies in the long term, easing a shortage of vessels sooner than expected, Hwang said.
“But all shipbuilders are waiting to see when it might be good to enter into LNG vessel deals and waiting for a forecast that the LNG market is going in a positive direction,” Hwang said.
LNG traffic on the seas, which showed 6 percent average annual growth from 2000-2009, is forecast to rise by 7.7 percent annually by 2015 due to Japan’s nuclear woes, according to Seoul-based KB Investment & Securities.
The Japan quake should drive stronger demand for Australian output with 200 billion Australian dollars ($205.5 billion) in proposed LNG export projects in the pipeline that could be a massive boost to the tanker market, according to industry analysts.
Heavy energy-consuming countries such as the United States, China and Germany, are reviewing nuclear power projects after Japan’s March 11 earthquake and tsunami led to the closure of Japanese capacity.
Japan is already the world’s No.1 LNG buyer and is now entering into additional LNG supply deals with neighboring countries to cover power shortages in the same way that a 2001 power outtage in California boosted the market for LNG vessels.
Late in February, Daewoo won an order worth up to $5.7 billion from A.P. Moller-Maersk, the world’s biggest container shipping firm, to build the world’s largest container ships.
If the total deal is finalized, that would hand Daewoo more than half of its 2011 order goal of $11 billion, although Hwang said the company had no plan to lift the target due to capacity constraints at its shipyard.
There are also pressures on the cost side due to rising prices for steel plates, which Hwang said, could only be partly passed on to customers.
