According to USBS, global order catalog is expected to continue current declining momentum, which is likely to intensify the competition between shipbuilders and further drive newbuilding price down. Newbuilding output is to slow down and global economy is likely to bottom out in 2013, however, ordering activities are difficult to recover due to the capacity oversupply. The new order volume of the first nine month in 2012 has fallen by 44% with economic conditions and financial support getting worse.
UBS estimates that more small and medium shipyards are to be eliminated in the future. At present, more and more shipyards are facing grim conditions with new order shrinking and pre-payment reducing to as low as 30% (80% normally). Some shipyards even contract new order at prices lower than the cost. The workload for most shipyard stands at 1.6 years currently against 3.5years in 2008.
With the growing demand of energy, the development of ocean gas and oil has becoming more important. UBS projects that new orders of offshore plants will keep rising in the next two or three years. As for LNG carriers, new orders are likely to be lower than expectation due to the order boom in 2011 and the limited supply of global LNG production equipment.
Investors’ expectation for shipbuilding industry has become more pessimistic. UBS estimates new orders are to grow by 12% in 2013, however, shipyards’ profits are unlikely to see any recovery. Shipbuilding market is expected to grow worse firstly before becomingbetter.