Maersk sees firm new ship prices in next 12-18 months
Prices of new sea vessels may stay 'firm' for the next 12 to 18 months because raw materials for shipbuilding, including steel, are expensive to procure while demand remains strong, a ship broker said.
The Maersk Broker Newbuilding Index may stay high after rising to a record in May as demand for vessels including large crude and bulk carriers is expected to be firm while yards face rising costs, Jimmy Olesen Carlestam, director of Maersk Broker Asia, said. Prices may start to 'soften' in two to three years when a large number of vessels are delivered, he said.
China will become the biggest shipbuilding nation, overtaking South Korea by 2012, as output grows 25.9 per cent a year with new yards being built and existing ones expanded, he said at a conference in Singapore on Wednesday.
South Korea will grow 17.2 per cent a year to 71 million dead weight tonnage (dwt) by 2012 compared with 78 million dwt in China.
'Prices are unlikely to reduce as yards face continuous increase in costs while having a record forward order tonnage,' he said.
Labour costs will rise in China while South Korea and Japan gain in cost-efficiency and productivity. The price gap between Japanese and Korean and Chinese shipyards to build new ships will continue to narrow, Mr Carlestam said.
Japan's shipbuilding business will be near stagnant and will grow 1.2 per cent a year to 31 million dwt by 2012, he said.
Low-cost shipbuilders in Vietnam, India and the Philippines must boost their productivity and cut raw material-sourcing costs to compete with the established nations, he said.