SHANGHAI-based Hudong-Zhonghua Shipbuilding, a subsidiary of China State Shipbuilding Corp, officially commissioned its new shipyard on Changxing Island, a major strategic move aimed at expanding its capacity for high-value vessel construction, particularly liquified natural gas carriers, according to a company announcement.

The new shipyard, located on the southern coast of Changxing Island in Shanghai, covers 431.8 ha and involves a total investment of Yuan18bn ($2.5bn). Once fully operational, the yard’s LNG carrier output is expected to increase from six vessels per year to more than 10.

The commissioning of the yard comes at a time when US lawmakers have reintroduced the SHIPS Act, a bill that would require a portion of US imports from China, as well as US LNG and crude oil exports, to be transported by US-built vessels. The move is widely seen as a challenge to the growing presence of Chinese shipyards in the LNG sector.

According to S&P Global, while only 7% of the current global LNG carrier fleet was built in China, Chinese yards now account for 28% of all new LNG orders.

Data from Zheshang Securities and Founder Securities shows that, as of January 24, the yard held an order backlog of about 11m dwt, ranking second globally in terms of cgt.

The orderbook is scheduled into the post-2030 period and includes nearly 60 LNG carriers, or more than 20% of the global total.

But the expansion coincides with increasing headwinds from the US policy front. Starting from April 2028, 1% of all US LNG exports will have to be exported on US-flagged and US-operated vessels. Starting in April 2029, the requirement expands to include the vessel should also be US-built.

Chengtong Securities analyst Fan Yunhao suggested that if implemented, new port fees and legislative restrictions might put pressure on shipowners’ ability to fulfil existing contracts with Chinese shipbuilders.

He warned that the bill had cast uncertainty over China’s shipbuilding export outlook, particularly for LNG carriers.