Tradewinds: Dollar Dilemma for Asian Yards

“Attempts to revive the shipbuilding market are expected to falter as Asian currencies continue to strengthen. All eyes will be on shipyard prices next year to see if they can hold up in the face of an expected fall in contracting levels for both bulkers and tankers. Demand is usually the determining factor in setting price but currency values also look set to play an increasingly important role if the US dollar remains weak against the major shipbuilding currencies…. As US shipbroker Poten & Partners pointed out: ‘With interest rates at historically low levels, pragmatic investors have much incentive to seek out capitally intensive projects to the extent to which they can find financing.’ Its analysis shows the real price of ships, which takes into consideration inflation and currency matters, has consistently stayed ahead of nominal newbuilding prices quoted in the market. Yet it also found that overall demand and supply fundamentals in shipping play a more important part in determining price.”