The Waiting Game

The combination of general uncertainty and little activity in the sale and purchase market make the task of assessing asset prices challenging. With few reported deals acting as a benchmark, pessimism has been the primary driver in weakening vessel prices. As shipyards and the market formulate prices, there are some commonalities regardless of sector: steel, labor, engines, piping and finishings. Until recently, both the rising cost of components and the competition for berth space served to increase prices. Now, although the fundamentals of different shipping sectors vary, many believe a downward trend price is pervasive. The chart below shows the assessed newbuilding price for VLCCs, assuming three years forward delivery.