Industry News

Newbuild prices under pressure as steel plate prices surge

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Update time : 2021-07-26 20:07:33

Sharply contrasting fortunes from two Korean conglomerates last week have sparked conjecture on whether newbuild prices will head further north.

Hyundai Heavy Industries, the nation’s largest shipbuilder, reported a Q2 loss last week, citing soaring steel plate losses for its red ink performance, while Posco, South Korea’s top steel mill, registered an all-time record quarterly result.

According to Cleaves Securities, newbuild prices have risen by 12% year-to-date, the majority of the price increase down to higher steel prices. A VLCC newbuilding has increased by $12m in steel costs alone this year.
 

“Against our overall view of increasing newbuild ordering over the next years due to a prolonged period of underinvestment in shipping, we expect newbuild prices to rise further,” commented Joakim Hannisdahl, Cleaves’s head of research.

Rebecca Galanopoulos Jones, head of research at brokers Alibra Shipping, pointed out that yards have already this year put some contracts on hold until there was more clarity over steel prices and then, in many cases prices were renegotiated higher.

“Any future price rises will very much be driven by sentiment in the direction of steel prices,” Galanopoulos Jones said.

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