The shipbuilding market is currently feeling little upset due to the order cancellation at Daewoo Shipbuilding of two large tankers and two bulkers.
Order cancellation is of course not something new and will either bring the shipyard big considerable damage. However, what the market worries is the increasing threat to shipbuilders.
Apart from this first order cancellation for a major South Korean shipyard this year, the privately-owned Greek ship owner Gulf Marine Management SA called off two VLCC and two bulkers it ordered from South Korea's second-biggest shipbuilder at the height of the shipping boom in 2008 for its failure in making a second payment.
Some analyst from RBS points out there is little catalyst for the ship sector for the time being. If the European debt crisis should get worse, the risk of falls in ship prices, the deferral of payments and the delay and cancellation of orders may be prolonged.
Some shipowners may even tend to cancel current orders and place new orders, for some ship prices is likely to fall below the levels in the global financial crisis.
The shipbuilding market has now been hit hard by Europe's debt crisis and growing financing difficulties. The number of shipbuilders and shipowner confronted with financing difficulties is growing rapidly, which may shadow on newbuilding sectors later.
On the other hand, the ships ordered in good market have gradually hit the water. However the cargo to be carried is on the down side due to the cooling global economy. The growing overcapacity and worsening freight market may make the thing degenerate further.