Newbuilding prices may be softening following a sluggish first half for the world’s shipbuilders, according to a leading Greek shipbroker.
It comes with each of the core markets seeing a sharp slowdown in newbuilding business in the opening six months of 2019 and what some believe is a record low in the second quarter.
The past week has seen a spike in deals for new tankers at South Korean shipyards, with brokers at Intermodal noting that the contracts showed a dip in average newbuilding prices.
It said the trend was also evident in the dry bulk sector, “where average quotes from builders have been also moving south in the past weeks”.
“With upcoming regulations having substantially fuelled shipbuilding activity in the past couple of years, it is no wonder that shipyards want to extend this momentum and have been offering more attractive contracts in a first attempt to do so,” Intermodal said.
“While given the substantial business most of these builders have earned in the recent past that has allowed for healthy liquidity, we don’t see these discounts becoming much steeper at least within this year.”
Notable tanker deals of late include an additional VLCC chalked up by Oman Shipping Co at DSME, a ship Intermodal pegged at $91.3m.
As TradeWinds has reported in the past few days, Sinokor and Finnish refiner Neste are also understood to have added new tankers.
According to Clarksons, newbuilding prices have crept up this year, with its benchmark price index reaching the highest level since February 2016 at the end of May.
Olivia Watkins, VesselsValue's head cargo analyst, wrote in a report this week that newbuilding activity had fallen to record lows in the second quarter of 2019, accelerating a downturn seen this year.
She said dry cargo orders dropped by more than 70%, with tanker business down by almost 50% in the first half.
“VLCC orders are down 60% for 2019 year to date, compared to the same period in 2018 despite having a good winter for rates,” Watkins wrote.
Containership deals have fallen by 49% with just 48 ships contracted so far in 2019, while LNG newbuilding activity is down by more than one-third, she added.
