Across all shipbuilding sectors, increases vary and are most pronounced for VLCC tankers.
A VLCC newbuild costs $128 million today and is up 50% from the end of 2020.
Pricing has reached a deterrent level for many ship types with Clarksons analysts pointing out in the company’s latest weekly report that a capesize newbuild costs 24 years of current earnings, compared to 12 years on average in 2021.
Newbuild experts at another London brokerage, Gibson, recently described large order books in Asia, which now stretch comfortably to 2027, as well as how yards in China and South Korea are struggling to maintain existing, burdened delivery schedules in light of work pressures.
“Therefore, we do not see much realistic ability for shipyards in both Korea and China to significantly reduce prices anytime soon,” Gibson noted.
Clarksons Research’s Newbuild Price Index, which tracks a basket of prices across major ship types, hit 176 at the end of October, up 36% since the end of 2020, up 9% from the start of 2023 and the highest level since in December 2008.
As an inflation-adjusted index using today’s value of the dollar, the price index is now the highest since 2012, about 30% below the peak price levels of 2008.
The limited availability of yards where future coverage currently stands at 3.6 years, according to Clarksons, combined with general yard inflationary pressures, including labor costs, have supported an upward trend in newyard pricing.
Post-financial crisis newbuild prices are not necessarily enough to generate good returns for shipyards, Pareto Securities pointed out in a recent report, adding:
“Their input costs have gone way up (above general inflation) and the long-discussed labor shortage is now a real constraint on production.”
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