Shipbuilders have bumped up their newbuilding prices by about 15% on the back of soaring steel prices and limited berth availability — with the cost of a VLCC now topping $100m.

Brokers said the main South Korean yards have increased prices from around $85m last autumn, while aframax tanker prices have jumped from less than $45m to nearer $53m.

On the bulker side, newcastlemaxes are up from low $50m levels to the high $50m range in recent negotiations, while kamsarmax tonnage has risen from the high $20ms to between $33m and $34m at Japanese yards.Steel shocker

One senior executive at a large South Korean yard told TradeWinds that even a $100m price tag on a VLCC is below the cost of building it.

Hot steel

He cited a huge rise in steel plate prices to more than $1,000 per tonne, with further rises promised. This compares with about $500 per tonne a year ago and is among the highest levels seen in 13 years.

“This is huge for them [shipyards]. It is a direct cost,” one broker said, with another describing yards as “exposed” on steel pricing.

But owners sounded frustrated at the steel price rises and yards’ inability to hedge forward on this.

One explained that yards are buying steel today for vessels on which they would start steel-cutting in the next couple of months, but which were contracted up to 12 months ago.

In response, shipyard chiefs appeared to be adopting an almost challenging tone to owners. “The market is changing,” one said in a message to owners. “If you are ready, then come.”

Vanishing slots

But for those owners that do, berth availability is also likely to be an issue.

The deluge of containership orders, which is continuing, with several owners and operators still to firm up orders, has mopped up berth space, with shipyards preferring the higher-margin boxship contracts.

There is also uncertainty about how many of the options attached to these contracts will be declared, which is blurring the picture ­further.

In addition, South Korea’s big three yards and China’s Hudong-Zhonghua Shipbuilding (Group) must factor in the upcoming orders from owners selected to take up the slots for the large number of LNG carrier berths reserved by Qatar Petroleum.

Brokers said next year’s delivery slots are full, as are most of those in 2023. This is pushing handover dates into 2024 at the bigger yards in South Korea and China, although there may be availability at smaller facilities.

Negotiations paused?

Amid the slot supply crunch and price rises, talk is emerging that some newbuilding projects may be temporised, with China State Shipbuilding Corp said to be putting a hold on negotiations.

Brokers said lower-margin tanker business may prove less tempting for yards in the current pricing environment.

The first four months of 2021 have proved lively for newbuildings, but the action has prompted some players to predict a softer second half for orders, given the price rises and slot ­scarcity.

One broker forecast a “miser­able” mid-year for speculative business, but said strategic ordering would still go ahead.

The hesitancy comes at a time when many owners are wrestling with the needs to renew their fleets, and the fuelling and vessel design choices that will give them the longest trading life.