Uncertainty still continues in the world's shipbuilding industry and “The best case scenario for shipbuilders is for ship finance liquidity to return and for a cut in Chinese overcapacity,” said Mark Williams, Braemar Seascope's research director.
“There needs to be renewed interest in eco-designs and ships with options such as LNG or Ballast Water Treatment Systems and then possibly any increased demand will support pricing from the shipyards’ point of view,” he continues.
The worst case scenario, however, is for a continuation in the credit crunch; weak freight markets continuing to suppress newbuilding demand; input costs and forex turning against the builders; more cash flow problems and failures.
“Investors are unlikely to invest in new tonnage this year without a fair prospect of economic return even if there is a short term recovery in freight markets, with many believing more needs to be done to encourage a return in confidence in the newbuilding sector,” Mr Williams said.
“There is far too much shipbuilding capacity out there. 2012 was the peak delivery year since the mid-1970s. So it is a question of who will blink first.”