Korea faces new waters in pursuit of Japan, China in ammonia vessels

Ammonia seems to be the new green breakthrough in next-generation carbon-neutral fuel, and Asian shipbuilders are rearing to take the lead in the burgeoning market, a market that appears more and more of a necessity with LNG orders drying up.

An ammonia carrier built by Samsung Heavy Industries [SAMSUNG HEAVY INDUSTRIES]

Ammonia seems to be the new green breakthrough in next-generation carbon-neutral fuel, and Asian shipbuilders are rearing to take the lead in the burgeoning market.

Japan, with its cargo tank technology, is focusing on ammonia carriers, while China, known for building vessels at lower costs, is concentrating on ammonia-powered ships. For Korea, where orders for its highly profitable liquefied natural gas (LNG) carriers have dried up this year, its development of next-generation vessels has become a necessity, not a choice.

Japan’s Sasaki Shipbuilding recently secured the world’s first order for an ammonia bunkering vessel — a ship designed to carry ammonia and supply it to other vessels at sea — from general trading company Itochu, the Nikkei reported on July 14.

Ammonia has the advantage of emitting no carbon during combustion and is 1-and-a-half times more energy-dense than liquefied hydrogen, making it easier to distribute. The Korea Institute of Energy Research has analyzed that ammonia will become more cost-effective than natural gas if carbon emission costs rise to between $50 and $90 per ton of carbon dioxide. As global ammonia usage increases, so too is demand expected to rise for carriers and bunkering vessels.

The challenge lies in the fact that a carrier’s cargo tank must maintain ammonia at a liquefied temperature of minus 33 degrees Celsius (minus 27.4 degrees Fahrenheit) while withstanding its toxicity.

A launch ceremony for the Mogami, built by Mitsubishi Heavy Industries in Nagasaki, Japan [YONHAP]

Japan’s shipbuilders and shipping companies have joined forces to overcome this technical hurdle. Mitsubishi Shipbuilding and Namura Shipbuilding are jointly developing an ammonia carrier with the shipping company Mitsui O.S.K. Lines.

“Although Japan’s shipbuilding industry has shrunk in size and influence since the 1990s, its technology remains strong,” said Rhee Shin-Hyung, professor of naval architecture and ocean engineering at Seoul National University. “Japan continues to lead in research on next-generation energy carriers, such as ammonia and liquefied hydrogen, particularly for small- and medium-sized vessels.”

China, on the other hand, is focusing on ammonia-powered ships rather than carriers, which require more sophisticated cargo tank technology. The country is equipping general-purpose vessels such as container and bulk carriers — sectors where China has a price advantage — with ammonia engines.

Chinese-built general-purpose vessels are reportedly over 20 percent cheaper than those constructed in Korea, a gap China is leveraging. Last year, China State Shipbuilding Corporation secured the world’s first orders for ammonia-powered ships across three types: bulk carriers, container ships and oil tankers.

A 23,122-TEU liquefied natural gas-powered container ship under construction at the Jiangnan Changxing Shipyard on Changxing Island in Shanghai [YONHAP]

Korea’s shipbuilding industry, which had been all-in on LNG carriers, now faces a pressing need to pivot as the need for a new environmentally-friendly ship to succeed LNG carriers is becoming urgent. LNG carriers account for roughly 50 percent of Korea’s commercial shipbuilding revenue, but only eight were ordered globally in the first half of this year, a drop of 87.7 percent compared to 65 in the same period last year.

Since Qatar’s government ordered over 100 LNG carriers in 2018, global LNG carrier capacity grew by an average of 7.1 percent annually through last year. However, as supply has caught up with demand, new orders have stalled. According to the Export–Import (Exim) Bank of Korea, global LNG carrier capacity stood at 121.6 million cubic meters (4.3 billion cubic feet) last year, a 102.4 percent increase from a decade ago.

Korean shipbuilders are leveraging their gas carrier cargo tank technology to develop ammonia carriers. Because ammonia liquefies at a higher temperature than LNG’s minus 162 degrees Celsius, Korean shipbuilders — already experienced in LNG cargo tank production — are regarded as technologically advanced in ammonia carriers as well. HD Korea Shipbuilding & Offshore Engineering secured orders for two ammonia carriers worth 339.6 billion won ($245 million) last year, while Hanwha Ocean won orders for two carriers worth 331.2 billion won.

“No one knows for certain which type of vessel will become the next flagship after LNG carriers,” said Kim Yong-Hwan, professor of naval architecture and ocean engineering at Seoul National University. “Still, maintaining Korea’s technological edge in gas carriers while expanding into ammonia and liquefied hydrogen is crucial.”

An ammonia carrier (VLAC) built by Samsung Heavy Industries [SAMSUNG HEAVY INDUSTRIES]

China’s push into ammonia-powered ships is also a market Korea cannot afford to overlook. The International Energy Agency forecasts that ammonia-powered ships will grow from 8 percent of the global fleet in 2030 to 46 percent in 2050. Although China acquired Swiss engine maker WinGD in 2015, experts say its engine manufacturing technology still lags behind Korea’s. In the first quarter of this year, 46.1 percent of HD Hyundai Marine Engine's first-quarter sales of 2025 came from Chinese shipping yards, highlighting China’s reliance on Korean technology.

The key challenge for Korea is to widen the quality gap enough to overcome price differences with Chinese-built ships.

“Korea cannot build general-purpose ships cheaper than China, but it can build better ones,” said Yang Jong-Suh, a senior researcher at the Exim Bank of Korea. “Even a 3 percent improvement in fuel efficiency with the environmentally friendly engines currently in development could easily offset a 20 percent difference in vessel price.”

Translated from the JoongAng Ilbo using generative AI and edited by Korea JoongAng Daily staff. BY OH SAM-GWON [yoon.soyeon@joongang.co.kr]