Norway’s Solvang is being linked to an order for two VLGC newbuildings at Hyundai Heavy Industries (HHI).
HD Korea Shipbuilding & Offshore Engineering Co (HD KSOE) said it has inked a newbuilding order with a European company for the construction of two VLGCs worth KRW288.2bn ($215m) or $107.5m per ship.
The South Korean shipbuilding group did not reveal the name of the buyer but said the VLGCs will be constructed by the Ulsan-based HHI.
The deal brings the total number of VLGCs that the Stavanger-headquartered company has on order to five.
Shipbuilding sources following Hyundai’s newbuilding activities said the two VLGCs are option units that the company held when it ordered its earlier three vessels at the yard in July.
Sources said the LPG carriers have a capacity of 88,000-cbm each but have a traditional panamax beam to allow the ships to pass the old Panama Canal locks.
HHI is scheduled to deliver Solvang’s latest two newbuildings by July 2027 while the first three VLGCs are slated to roll out of the drydock in 2026.
Officials at HHI declined to confirm the identity of the VLGCs buyer citing contract confidentiality while Solvang was not available for comment at the time of writing this story.
Brokers said Solvang is a dedicated LPG carrier operator and they believed the company is taking a long-term view of the market for the newbuildings and may already have charter commitments lined up.
The new vessels are also part of its fleet’s renewal programme as the owner had disposed of three LPG carriers last year, including the 73,500-cbm VLGC Clipper Sirius (built 2008).
The VLGC newbuilding market has been active for the last two years which saw shipping companies such as Eastern Pacific Shipping, Evalend Shipping, Latsco Shipping and several others ordering the gas carriers.
There are currently around 90 VLGCs on order, compared to a fleet of 381 vessels.
Mia Groeng of Norwegian shipbroker Fearnleys said the number of VLGC newbuildings on order looks big, but said the ship type needs some renewals, partly due to an ageing profile, but mostly down to new environmental regulations.
Clarksons’ half-year report said the LPG market has had its strongest-ever half-year period, with VLGCs seeing rates hit $73,000 per day.
An increase in US long-haul exports to the Far East has been a major factor in supporting the booming market.
One LPG player said the strong market fundamentals are driving demand for VLGCs. The market outlook for VLGCs looks good due to a growing Asian demand for LPG.
