Shares of Asian shipbuilders and shipping firms rallied Wednesday on expectations that European countries may seek seaborne sources of natural gas as tension escalates with Russia over Ukraine.
Russia is Europe’s top gas supplier, with typically about a third of flows traveling through Ukrainian pipelines. A disruption of Russia’s supply to Europe is likely, according to the Eurasia Group, with Germany effectively freezing the approval process to start the new Nord Stream 2 gas pipeline.
For Europe to boost liquefied natural gas imports from other countries like the U.S., it would need more tankers to ship the fuel by sea, according to Lee Dong-heon, an analyst at Daishin Securities.
Korean shipbuilders and their suppliers were the biggest winners on the country’s benchmark equity index. STX Engine Co. and STX Heavy Industries Co., which manufacture engine and engine components for ships, jumped more than 20%. The Kospi index was up as much as 0.8% before paring its advance.
All major Korean shipyards soared including Daewoo Shipbuilding & Marine Engineering Co., Korea Shipbuilding & Offshore Engineering Co., Hyundai Heavy Industries Co. and Samsung Heavy Industries Co.
In Taiwan, the sectoral gauge of shipping and transportation firms surged as much as 3.4%, leading the benchmark Taiex higher. Among the winners were China Container Terminal Corp. and TZE Shin International Co., which were both up around 10%.
“South Korean shipmakers account for about 90% of global LNG ship orders,” Lee said “Although orders for the LNG tankers may not go up all of sudden, investment sentiment on the sector is still improving.”
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