LNG Carriers Market - Growth, Trends, COVID-19 Impact, and Forecasts (2022 - 2027)

LNG Carriers Market - Growth, Trends, COVID-19 Impact, and Forecasts (2022 - 2027)

The LNG carrier market is expected to grow at a CAGR of approximately 3.6% during the forecast period. LNG carriers are the tank ships designed to carry Liquefied Natural Gas (LNG) at a cryogenic temperature of -161°C. The COVID-19 pandemic has hindered the growth of the market as the demand for gas declined in the first half of 2020. The European sector which is an important geographical region for the market is expected to take a lot of time to recover which was expected to invest a high amount in the market. Factors such as flexible deployment capabilities, increased efficiency are expected to drive the market in the coming years. Global consumption of LNG is expected to grow at a significant rate during the forecast period, driven by supportive government regulations and increasing demand from several end-user industries including power generation, industrial, etc. With the new carrier fleet entering the market and with regional shipping imbalances, there has been a fluctuation in the charter rates of the carriers. This factor is expected to hinder the market growth.

Key Highlights

• Membrane type containment is the largest segment of the global LNG carrier market as of 2019, owing to its higher carrying capacity and increased visibility. This segment is expected to continue to dominance in the market during the forecast period.
• Many terminals are adjusting to accommodate small-scale and bunkering vessels to comply with emissions targets and capture new commercial opportunities. Conventional oil-based fuels will remain the main fuel option for most vessels in the near future, and, at the same time, the commercial opportunities of LNG are much interesting for many projects.
• The Asia Pacific is expected to dominate the market with a majority of the demand coming from the countries such as China and Japan.

Key Market TrendsMembrane Type Containment to Dominate the Market

• The membrane type segment has the largest market share in 2019, accounting for more than 75% of the market in 2019, owing to its higher carrying capacity and other advantages. This containment segment is expected to dominate the global market throughout the forecast period.
• The most common membrane tank systems have been designed by Gaztransport and Technigaz (GTT). Several GTT systems have already been implemented onboard LNG carriers for many years and other designs from different companies have been developed.
• At the end of 2019, 419 units of the active fleet had a GTT membrane type containment system which also continues to lead the order book as the preferred containment option.
• Due to technological advancement, the membrane type containment has a superior capacity to bear the large pressure of LNG and its compact shape to carry large LNG volumes as compared to moss type containment.
• Therefore, with largest market share and existing fleet by containment type (active), the demand for LNG carrier market is expected to grow significantly over the forecast period.

Asia Pacific to Dominate the Market

• Asia Pacific accounted for the largest LNG carrier market share in 2019, owing to increased demand for natural gas because of high industrial growth and adoption of clean energy sources. Therefore, this region is expected to continue its dominance in the market throughout the forecast period. Most of the demand in the region came from the People's republic of China.
• In 2020, the Chinese government announced that it is building the largest liquefied natural gas carrier with a capacity of 270,000 cubic meters, to meet the rising demand for clean fuel in the country. China’s LNG import is still severely dependent on foreign LNG carriers, with an external capacity dependence rate of around 60%.
• Furthermore, China imported more than 61.7 million metric tons of liquefied natural gas (LNG) in 2019, a 14.3% increase compared to 2018, reaching a new historical high by accounting for 17.4% of the total natural gas import. In 2018, more than 354 million metric ton of LNG was imported. Therefore, this made China an important contributor to the global LNG industry's development and prosperity.
• The industry is also looking for better ways to produce LNG carriers such as - The Sayaendo type vessel, produced by Mitsubishi, which is an improvement to the traditional Moss Rosenberg system. The spherical tanks are elongated in an apple-shape, increasing volumetric efficiency. They are then covered with a lightweight prismatic hull to reduce wind resistance. Sayaendo vessels are powered by Ultra Steam Turbine plants, a steam reheat engine, improving efficiency on a regular steam turbine engine. Additionally, the Sayaringo Steam Turbine and Gas Engine (STaGE) type vessel, also produced by Mitsubishi, is a further improvement on the Sayaendo type vessel. The STaGE vessel adopts the shape of the Sayaendo alongside a hybrid propulsion system, combining a steam turbine and gas engine to maximize efficiency. Eight STaGE newbuilds were delivered during 2018 and 2019.
• Furthermore, the growing LNG consumption by various end-user industries, such as manufacturing, petrochemicals, and fertilizers is on a consistent rise in China and South Korea whereas; Japan prevalently consumes LNG for power generation. These are the countries that are expected to majorly aid in the growth of the Asia-Pacific market.

Competitive Landscape

The global LNG carriers market is moderately fragmented. Some of the major companies operating in the market include Royal Dutch Shell plc, (Shell), Nippon Yusen Kabushiki Kaisha (NYK), Mitsui O.S.K. Lines, Ltd. (MOL), Misc Berhad (Misc), and Teekay Corporation.

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