MOL tied to US$500M order for three VLECs at Samsung

On December 26, Samsung Heavy Industries (SHI) announced an order for three ethane carriers valued at approximately US$503.5M from an undisclosed Asian shipowner. Shipbroking sources have connected Mitsui OSK Lines (MOL) to this order. SHI noted that the vessels are slated for delivery by December 2027.

This development follows a similar newbuilding agreement from about a year ago, when multiple market reports associated MOL with an order at South Korea’s HD KSOE for three 98,000-m³ very large ethane carriers (VLECs).

The Japanese shipowner has been actively expanding its newbuilding portfolio, which spans bulk carriers, tankers, vehicle carriers, and increasingly, gas carriers. Over the past three months, shipbroking houses have reported MOL’s orders for very large gas carriers (VLGCs) and a floating storage and regasification unit (FSRU) at South Korean shipyards. Notably, MOL pioneered operations of the world’s first VLEC in 2016 through a strategic partnership with India’s Reliance Industries Limited.

As of March 2024, MOL managed a fleet of 873 vessels, according to the latest data on the company’s website.

Growing orderbook

Data from Drewry Maritime Research, published recently by Riviera, highlights a decline in ethane carrier orders for 2024, with 12 VLECs ordered by Q3 2024 compared to 31 in 2023.

The market is witnessing the rise of a larger vessel category: ultra-large ethane carriers (ULECs). This 150,000-m³ design has garnered attention, with companies such as Eastern Pacific Shipping ordering tonnage in 2024.

According to Drewry, the orderbook-to-operations ratio for ethane carriers is an extraordinary 220%, with 60 vessels on order compared to 27 currently in operation.

“The rise in demand for ethane as a cheaper feedstock for petrochem plants has supported new orders,” explained Aman Sud, Drewry’s senior lead analyst. “Higher ethane production, associated with record-high natural gas processing in the US, has increased the economic benefits of using the commodity for cracking.”

Additionally, ethane cracker facilities have emerged globally, with operational plants in India, China, and Europe, alongside others under development.