Ship prices expected to hold at record highs for two years
Hyundai Heavy Industries Co, the world's biggest shipbuilder, and its competitors will be able to keep charging record-high prices for at least two more years because rising demand has outpaced supply, shipowners said.
Executives at Varun Shipping Co, which has spent US$320 million buying vessels this year, and at BW Shipping Managers Pte, which runs the largest privately held oil supertanker fleet, said they expect current prices to hold for at least two years. STX Pan Ocean Co, South Korea's biggest transporter of iron ore and coal, said it may have to keep paying top dollar even longer.
Sea carriers ordered a record US$105.5 billion in new ships last year, enough to keep the largest yards working at full capacity until 2010. Demand has been driven by booming trade with China, the world's biggest importer of iron ore and copper.
'High building prices will remain for the time being, at least until 2011-2012, because of low capacity and strong growth in China,' STX Pan Ocean chief executive officer Lee Jong Chul said in an April 2 interview at Sea Asia 2007 in Singapore.
Seoul-based STX Pan Ocean is 39 per cent owned by STX Shipbuilding Co, also of South Korea. The country, the world's biggest shipbuilding nation, booked almost half of last year's orders for new vessels, in terms of the value of the contracts.
Shipowners ordered US$105.5 billion worth of new vessels last year, led by oil tankers, 37 per cent more than a year earlier, according to London-based Clarkson plc. That exceeded the previous record of US$76.3 billion spent in 2004, the world's largest shipbroker said on Jan 31. At Hyundai Heavy, based in Ulsan, swelling orders and prices helped boost its stock 135 per cent in the past 12 months, the sharpest gain among South Korea's 50 biggest stocks. Seoul-based Samsung Heavy Industries Co, the world's No 2 shipbuilder, is in the top 10.
Samsung Heavy won a contract in February to build four of the world's largest liquefied natural gas carriers for a record US$286 million each, 2.1 per cent more than a similar order last June. The ships carry enough fuel to power South Korea's 16 million households for three days.
'High ship prices are a concern, but as long as the premium on the new building price is absorbed into freight rates, it still makes economic sense for us,' Yudhishthir Khatau, managing director at Varun Shipping, said at the Singapore conference. Mumbai-based Varun has a fleet of 12 liquefied petroleum gas carriers, making it India's largest operator of such vessels.
Shipyards have raised prices for Very Large Crude Carriers, the biggest type of oil tanker, by 67 per cent since 2004 to an all-time high. The price of bulk carriers that move iron ore and coal has increased by about 30 per cent this year, according to Cho In Karp, an analyst at Seoul Securities Co.
Shipowners are still buying. Hyundai Heavy said on April 2 it had received orders this year for 47 vessels. That brought its backlog to 270 ships valued at US$26 billion, representing three years of work.
Executives at Varun Shipping Co, which has spent US$320 million buying vessels this year, and at BW Shipping Managers Pte, which runs the largest privately held oil supertanker fleet, said they expect current prices to hold for at least two years. STX Pan Ocean Co, South Korea's biggest transporter of iron ore and coal, said it may have to keep paying top dollar even longer.
Sea carriers ordered a record US$105.5 billion in new ships last year, enough to keep the largest yards working at full capacity until 2010. Demand has been driven by booming trade with China, the world's biggest importer of iron ore and copper.
'High building prices will remain for the time being, at least until 2011-2012, because of low capacity and strong growth in China,' STX Pan Ocean chief executive officer Lee Jong Chul said in an April 2 interview at Sea Asia 2007 in Singapore.
Seoul-based STX Pan Ocean is 39 per cent owned by STX Shipbuilding Co, also of South Korea. The country, the world's biggest shipbuilding nation, booked almost half of last year's orders for new vessels, in terms of the value of the contracts.
Shipowners ordered US$105.5 billion worth of new vessels last year, led by oil tankers, 37 per cent more than a year earlier, according to London-based Clarkson plc. That exceeded the previous record of US$76.3 billion spent in 2004, the world's largest shipbroker said on Jan 31. At Hyundai Heavy, based in Ulsan, swelling orders and prices helped boost its stock 135 per cent in the past 12 months, the sharpest gain among South Korea's 50 biggest stocks. Seoul-based Samsung Heavy Industries Co, the world's No 2 shipbuilder, is in the top 10.
Samsung Heavy won a contract in February to build four of the world's largest liquefied natural gas carriers for a record US$286 million each, 2.1 per cent more than a similar order last June. The ships carry enough fuel to power South Korea's 16 million households for three days.
'High ship prices are a concern, but as long as the premium on the new building price is absorbed into freight rates, it still makes economic sense for us,' Yudhishthir Khatau, managing director at Varun Shipping, said at the Singapore conference. Mumbai-based Varun has a fleet of 12 liquefied petroleum gas carriers, making it India's largest operator of such vessels.
Shipyards have raised prices for Very Large Crude Carriers, the biggest type of oil tanker, by 67 per cent since 2004 to an all-time high. The price of bulk carriers that move iron ore and coal has increased by about 30 per cent this year, according to Cho In Karp, an analyst at Seoul Securities Co.
Shipowners are still buying. Hyundai Heavy said on April 2 it had received orders this year for 47 vessels. That brought its backlog to 270 ships valued at US$26 billion, representing three years of work.
