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Inflationary trends in the shipbuilding sector push newbuild cost up, whils orders are down.

Affected by the covid-pandemic domestically, the major shipbuilding indexes of Chinese shipyards showed clear decline during January-April 2022.

According to the statistics released by China Association of the National Shipbuilding Industry (CANSI), the newly received shipbuilding order volume for Chinese yards was 15.39m dwt, down 44.8% year-on-year. Shipbuilding output was down 8.6% at 11.71m dwt. Orders on hand were 102.47m dwt as the end of April, an increase of 21.7% year-on-year.



Shipbuilding export volume for the first four months of the year was 10.28m dwt, declining 14.8%, while newly received export shipbuilding orders were 13.66m dwt, dropping 44.7%. Export orders on hand were 90.17m dwt as the end of April, up 20.5%.


Production at major yards in Shanghai have been hit the city’s lockdowns since late March although recent weeks have seen moves to get large-scale industrial production such as shipyards back into operation. Meanwhile globally newbuilding orders from shipowners have come off from last year’s peak. Shipbuilding export volume, new orders for export and export orders on hand accounted for 87.8%, 88.8% and 88% of national volume respectively. The export shipbuilding value was $5.83bn in the first four months, declined 10.2% year-on-year.


Chinese shipbuilding output, newly received orders and orders on hand respectively accounted for 43.8%, 54.1% and 48.5% of the global shipbuilding market share.


Simultaneously Inflationary trends in the shipbuilding sector have pushed new ship prices up by 25% since their November 2020 low, the steepest rate of increase since 2005.


Ship prices, in nominal terms, are now at their highest level since 2009. Further increases are likely, as raw material and energy prices continue to climb. Newbuilding prices vary across ship types, with container ships climbing most. A 15,500 teu vessel now costs close to 50% more than it did 15 months ago, at the beginning of 2021. Capesize bulkers are up by almost a third, MR tankers by 21%, and LNG carriers by some 18%.



The price of steel is one factor, with Chinese plate costing more than $800 a tonne, up by $250 over the last 24 months. Although  lower contracting volumes are expected this year due to higher prices, longer lead times, and uncertainty around future fuels, inflationary pressures on shipyard costs could yet push prices higher.


Many shipyards are now booking building slots for 2025 while the relatively small number of deepsea LNG shipbuilders are working on contracts for 2026. Sipyard forward cover is estimated at, measured in compensated gross tons, 2.9 years, up from 2.4 years in November 2019.


Even without today’s inflationary pressures, there is no doubt that the ships of tomorrow will cost more. That’s because they will be designed with engines that can adapt to a changing bunker backdrop while many will also be fitted with energy saving technologies.


Source: Sea Trade Maritime News






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