Newbuild prices picking up

Date: Tuesday, March 21, 2023
Source: Splash 24/7

Newbuild prices are on the way back up. Prices for new ships plateaued briefly for a couple of months towards the end of last year, but have been pushing back up since December.

According to data from Clarksons Research, newbuild prices have increased by 2% in the year to date following rises of 5% in 2022 and 22% in 2021.

Conceding that newbuildings are expensive, analysts at Poten & Partners reckon tanker owners will soon decide to take the plunge at yards in Asia, as secondhand options are limited and also pricey.

“Newbuilding slots may become more readily available as the yards receive less container and LNG orders,” Poten noted in its latest weekly report.

Financing is another factor that could impact owner decisions, according to Poten.

Rapidly rising interest rates and a shrinking number of banks interested in traditional ship finance already made it more difficult and expensive to finance secondhand ships with a traditional mortgage, Poten pointed out, adding: “The recent turmoil in the international banking system will only make that more challenging.”

In contrast, funds to finance newbuildings are more accessible, in particular shipyard credit in combination with funding from Chinese and Korean export-import banks.

For the last couple of years yards in Asia have accepted vast, record orders for container and LNG ships, while tanker and bulker ordering has been muted, something many experts are predicting will switch around in the coming months.

According to brokers Braemar, 2021-22 marked the most active period for the global shipbuilding industry since the 2006-08 and 2013-15 booms. As such, major yards’ forward cover now extends well into 2025-26.

Braemar analysis suggests globally shipyard capacity has shrunk by a third since 2010. However, a number of shuttered Chinese yards are dusting off their facilities.

China has seen many yards that sprouted up during the shipping boom of 2003 to 2008 reopen in the past 12 months including STX Dalian, now Hengli Heavy Industries, Weihai Samjin Shipbuilding and Rongsheng Heavy Industries, now rebranded as SPS Shipyard. Another company Jinhai Intelligent Manufacturing, formerly called Jinhai Heavy Industries, is seeking to rent out its yard to a fellow Chinese shipbuilder.


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