Posco, Hanwha Ocean to commercialize high-manganese steel for LNG carrier cargo tanks

Companies sign MOU to secure demonstration vessel with high-manganese steel cargo tank

High-manganese steel application to expand into cryogenic maritime transport

Move expected to ripple across Korea's broader shipbuilding sector

Posco Group eyes synergy across its LNG value chain spanning terminals, shipping and materials

Hanwha Ocean CEO Kim Hee-chul (fifth from left) and Posco CEO Lee Hee-geun, along with executives from both companies, pose for a photo Thursday at the signing ceremony for a memorandum of understanding to secure a demonstration vessel equipped with a high-manganese steel cargo tank. [Posco]

Posco will partner with Hanwha Ocean to extend the application of its proprietary high-manganese steel — already used in LNG fuel tanks aboard LNG-powered vessels — to cargo tanks, the core storage systems on large LNG carriers that hold liquefied natural gas in bulk for overseas transport.

Posco announced Thursday that it signed a memorandum of understanding with Hanwha Ocean to secure a demonstration vessel fitted with a high-manganese steel cargo tank. The signing ceremony was held at Hanwha Ocean's Geoje shipyard and attended by Posco President Lee Hee-geun, Hanwha Ocean CEO Kim Hee-chul and other senior executives from both companies. Posco International and Posco Flow, key affiliates within the Posco Group, are also participating in the collaboration to support the vessel's procurement and operation from multiple angles. A demonstration vessel is a ship used to verify the performance of new materials or technologies under actual operating conditions.

The two companies plan to build a demonstration vessel with a high-manganese steel cargo tank, led by Hanwha Ocean, and verify its safety, durability and operational efficiency under real sailing conditions to accumulate a practical "operating record" to present to global shipowners.

If the superior performance and safety of high-manganese steel — a domestically developed material with an overwhelming competitive edge — are proven in the LNG cargo tank market, which has long depended on foreign technology, the development is expected to mark a turning point that gives Korea's entire shipbuilding industry differentiated cost and technological competitiveness.

High-manganese steel is a specialty steel developed through Posco's proprietary technology that maintains excellent strength and impact toughness even in cryogenic environments below minus 163 degrees Celsius. Compared with the expensive nickel alloy steel (INVAR) that has dominated LNG cargo tanks, it uses manganese — an element available in abundant reserves — delivering strong cost competitiveness and stable material supply.

The collaboration is significant because it marks the first full-scale expansion of high-manganese steel's application from a vessel's own fuel storage systems to large-scale cargo storage systems. Notably, while an LNG fuel tank requires about 1,000 tons of material per vessel, an LNG carrier's cargo tank demands more than 10,000 tons per vessel, representing a far larger market.

Adopting a new material, however, requires performance verification through actual operation. The MOU is expected to serve as a decisive turning point in building the commercial and global order-winning foundation for high-manganese steel cargo tanks by accumulating real operating records.

A large LNG carrier operated by Hanwha Ocean at sea. [Hanwha Ocean]

The material's technical advantages are equally distinctive. A high-manganese steel cargo tank can flexibly deliver anything from an ultra-low boil-off rate — minimizing LNG loss — to an economy-grade boil-off rate, depending on customer requirements. Its superior structural rigidity eliminates operational restrictions related to "sloshing," the phenomenon in which liquid cargo surges and strikes the tank walls, enhancing operational utility. The independent tank structure, in which the cargo tank is fabricated separately and then installed on the vessel, also significantly shortens shipyard construction time compared with conventional methods.

Against the backdrop of a global shift toward low-carbon energy, LNG demand is forecast to continue rising sharply. Accordingly, explosive growth is expected not only in the LNG carrier market but also across the broader maritime LNG infrastructure sector, including LNG bunkering vessels and floating storage and regasification units (FSRUs) — offshore floating facilities that receive, store and regasify LNG before supplying it onshore.

Posco Group has been actively pursuing a group-wide "LNG full value chain" synergy strategy that links Posco's development of next-generation materials, Posco International's LNG trading and terminal operations, and Posco Flow's logistics support into a single integrated offering. The high-manganese steel cargo tank demonstration project represents a flagship achievement of that strategy, bringing together the group's materials, trading and logistics capabilities to capture the global LNG and next-generation energy transport market.

The successful commercialization of high-manganese steel is closely tied to the proactive technology leadership of Posco Group Chairman Jang In-hwa. In 2017, when he was serving as Posco's executive vice president for technology investment, Jang recognized the technological value of high-manganese steel and led its application to the construction of the No. 5 unit at the Gwangyang LNG terminal, successfully completing and demonstrating the project in 2019. As a result, the material's application has expanded to overseas projects this year.

Later, while serving as Posco president in 2020, Jang personally visited Hanwha Ocean's management to explain the material's safety and application feasibility as part of hands-on efforts to build the necessary infrastructure for its expansion into the shipbuilding sector. After high-manganese steel was first applied to a limestone carrier ordered by Posco, it was subsequently used in the LNG fuel tanks of Hanwha Ocean's very large crude carriers and container ships in 2021. As of 2026, high-manganese steel has been applied to a cumulative total of 51 vessels, including those with LNG fuel tanks.

A high-manganese steel fuel tank installed on an LNG-powered vessel operated by Hanwha Ocean. [Hanwha Ocean]

Building on the LNG carrier cargo tank demonstration, the two companies plan to extend the application of high-manganese steel to other maritime energy infrastructure, including LNG bunkering vessels and FSRUs. Beyond LNG, high-manganese steel is also applicable to the transport of hydrogen, ethane, ammonia and other cargoes, and the companies intend to gradually expand its use across the broader cryogenic cargo transport market.

"Posco's unrivaled high-manganese steel technology will serve as a core weapon for Korea's shipbuilding industry to secure an overwhelming competitive edge in the global market," Posco President Lee said. "Starting with LNG cargo tanks, we will lead the global standard in the eco-friendly shipbuilding materials market."

"By combining the technological capabilities of both companies, we will provide cargo tank solutions with proven safety and economic viability, and expand their application to LNG and other low-temperature cargo transport sectors to cement Hanwha Ocean's technological prowess in the global market," Hanwha Ocean CEO Kim said.

Meanwhile, Posco Group recently announced a plan to build a "steel GX-based decarbonization industrial ecosystem" at a government event on the Korea Green Transformation (K-GX) strategy, presided over by the president. The plan calls for establishing a demonstration facility with an annual production capacity of 300,000 tons by 2028 using Korean-style hydrogen reduction steelmaking technology, and creating a steel decarbonization cluster linking a clean hydrogen supply chain with the industrial complexes in Pohang and Ulsan.

The Korea Green Transformation strategy is a national initiative aimed at simultaneously achieving carbon neutrality and economic growth, pursuing a green transition across industries along three directions: new-growth-engine GX, GX for all and sustainable GX.

likehyo85@heraldcorp.com