The shipbuilding market has slowed down substantially in the last seven months but newbuilding prices have remained strong, according to Clarksons Research.

This year saw 733 newbuildings totalling 45.5m-dwt and 23.9m-cgt ordered up until the end of July, which the shipbroker said represents an annualised drop of 41% in dwt and 20% in dwt cgt year-on-year.

Firm order volumes in 2021 saw 2,012 vessels of 133.1m dwt and 51.5m cgt ordered across the full year.

“Uncertainty surrounding fuel technology choices continues to weigh on order volumes, with broader economic headwinds currently impacting general investor sentiment,” Clarksons said.

Nevertheless, despite the drop in the number of contracts signed for new ships, yards have managed to stay firm on pricing due to high building costs and a shortage of labour supply.

“Newbuild prices remained at elevated levels in July, with our newbuilding price index standing at 162 points at the end of the month, up 12% y-o-y,” said Clarksons, which noted that the strong prices are supported by increased steel prices and inflationary pressures, as well as depleted slot availability.

“The global shipyard ‘forward cover’ now stands at 3.5 years, up from 2.8 years 12 months ago,” the shipbroker added.

Even though ordering volumes are down, the orders for the 733 new ships came in at around $62.1bn, a figure that is only down 7% year-on-year on an annualised basis.

Apart from firm newbuilding prices, Clarksons cited a greater proportion of high-value added vessels such as container ships and gas carriers, which it said have supported newbuilding investments.

Strong market conditions and positive investor sentiment saw 267 container ships and 106 LNG carriers ordered during the first six months of 2022.

“Interest in alternative fuel capable vessels has continued to grow, with 282 such units of 23.8m gross tons ordered between January and July,” Clarksons reported.

The UK firm said the global newbuilding orderbook was marginally down since the start of the year, containing 3,598 vessels of 216.3m dwt and 101.3m cgt.

“The global orderbook as a percentage of the fleet remains at historically low levels, standing at 9.7% in dwt terms as of the start August. This slight decline in the orderbook has been driven by historically weak contracting in the bulker and tanker sectors, which together accounted for 30% of order volumes in Januart to July, compared to 69% across 2017-21,” Clarksons said in conclusion.