Newbuilding Prices in Decline Until Next Year

Newbuilding Prices in Decline Until Next Year

The newbuilding price index has been in decline since June 2014, and the trend is likely to continue until next year, the South Korean daily Business Korea quoted US investment firm Morgan Stanley as saying. 

The newbuilding price index peaked at 140 in June last year, before steadily sliding and reaching 132 as of June 19 this year. Worryingly, the decline has been more rapid this year, with the index falling from 137.5 recorded in January, to 132.9 in May.

Morgan Stanley chalks the decline up to several factors, including the aggressive bids made by Japanese shipyards, backed by increased capacity through the expansion of shipbuilding facilities.

On the other side, China’s shipbuilding capacity has been declining since 2013, with a number of smaller shipyards going out of business.

The index has also been negatively affected by huge losses accumulated by South Korean major shipyards in 2014.

However, South Korean shipyards should not worry too much, according to Business Korea, as the prices of ships the country’s shipyards have specialized in have remained more or less steady.

The price of a 13,000 TEU container ship newbuilding has gone down from USD 117 million to USD 116 million, while a 8,800 TEU newbuilding is actually USD 1 million more expensive, standing at USD 89 million. An average price of a Capesize bulk carrier has gone down from USD 58 million to USD 50 million.

Image: Samsung Heavy Industries

 

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