Why Ship Prices Are Near All-Time Highs (AI Translation)

【周刊提前读】船价逼近历史巅峰 为何全球都在“抢船”

The global shipbuilding industry is experiencing a boom, with the gross profit margin for shipbuilding exceeding 20% and favorable payment terms attracting orders lined up for two to three years in advance [para. 1]. This surge is partly driven by China's expansive shipbuilding plans and the ongoing geopolitical crises, such as the Red Sea crisis originating from the Israeli-Palestinian conflict, which has created significant uncertainty [para. 2]. China's shipbuilding industry is particularly active, with state-owned giants like China Merchants Energy Shipping and China COSCO Shipping Corporation spearheading the "hundred-ship plan" to amass new, energy-efficient vessels, including oil tankers, bulk carriers, and LNG carriers [para. 3].

China's state-owned shipping companies, like China Merchants Group, are extensively expanding their fleets, with recent investment plans totaling billions of yuan [para. 3]. Other countries are not lagging; Japanese, South Korean, Middle Eastern, and European ship owners are also placing orders [para. 4]. For instance, South Korea's Cido Shipping has ordered 34 ships in the last four months alone [para. 5]. The international focus includes QatarEnergy's massive order for LNG carriers valued at over $7 billion, highlighting the global appetite for new vessels [para. 5].

Second-hand ship markets are also thriving, with prices often exceeding those of new builds due to high demand and geopolitical events driving freight prices [para. 6]. Data from Clarkson indicates that global new ship orders reached 42.07 million compensated gross tons (CGT) from January to August 2024, marking a notable 30% year-on-year increase, fueled mainly by Chinese demand [para. 8].

Geopolitics and environmental regulations are primary drivers behind the booming shipbuilding industry. Wang Xiang from Veson Nautical Greater China cites disrupted global supply chains and stringent environmental regulations as key factors [para. 9]. Since 2010, global shipbuilding capacity has been undergoing a cleansing process, with numerous shipyards having declared bankruptcy by 2020 [para. 10]. However, China has begun reactivating some dormant capacities, such as Rongsheng Heavy Industries, to meet rising demand [para. 11]. The country's shipbuilding industry has seen marked profitability, with entities like CSSC achieving significant profit growth in the first half of 2024 [para. 16].

Bulk commodity demand, especially for fossil fuels, is a major force behind the shipping boom [para. 17]. Global energy demands continue to climb, with fossil fuels accounting for over 80% of primary energy consumption in 2023 [para. 19]. China and India are the largest drivers of this demand, significantly impacting global shipping trade volumes [para. 21]. For instance, China's coal and crude oil imports increased by 13.3% and 11%, respectively, in 2023 [para. 23].

Oil and LNG trade patterns are changing, with a notable shift toward maritime LNG imports among European nations since 2022 [para. 25]. The Simandou iron ore project in Africa is also expected to boost the dry bulk market substantially by 2025 [para. 28].

Tankers are in high demand, with a surge in new orders driven by the need to renew aging fleets and comply with stringent environmental standards [para. 31]. "Shadow fleets" involved in transporting sanctioned oil from Russia, Venezuela, and Iran further fuel tanker demand [para. 32]. Overall, the current shipbuilding orders focus on replacing older, higher-polluting vessels with newer, more environmentally friendly ones [para. 34].

Amidst the environmental pressures, the shipbuilding landscape is becoming more dynamic [para. 39]. Technological advancements and sustainable practices are gradually becoming integral within the industry, which continues to thrive despite economic and geopolitical uncertainties [para. 46]. This marks a potential long-term growth trajectory for the shipbuilding sector, with ongoing efforts to balance environmental commitments and economic viability [para. 48].