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Global spending on newbuilds tops US$10 billion in first half of 2018

SPENDING on new ships is starting to slow after what could be called a spree in the first half of 2018 with US$10 billion being committed in the first quarter, reports the American Journal of Transportation

Global spending on newbuilds tops US$10 billion in first half of 2018
16 July 2018 - 19:06

SPENDING on new ships is starting to slow after what could be called a spree in the first half of 2018 with US$10 billion being committed in the first quarter, reports the American Journal of Transportation.

If orders remain between the $4 billion and $8 billion level through rest of the year it should support the asset values of younger ships as well, said Analysts VesselsValue (VV) of the Isle of Wight.



'Ordering trends in the start of the year were highest in the markets that were seeing the highest returns. This includes the dry bulk and LNG carrier markets, while interest in the low earnings environment tanker markets was softer,' they said.



In one sense this highlights the short-term view that some investors take of the market. It still appears to be easier to secure financing for ships in a strong market as opposed to those that are suffering in the doldrums.



Rising asking prices from shipyards are partially to blame in the downturn in new orders, said the report. Higher steel prices, smaller workforces, and less willingness by the yards creditors to accept low margins are contributing to lower buyer interest.



'The slowdown in newbuilds is an encouraging sign that over-ordering may not be a significant issue. Some of the market segments have a large outstanding orderbook, but most of these are offset by an equal number of ships on the water which are equal to their recycling value,' they said.

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