524 vessels, $38.3 billion! China becomes the main force in the global shipbuilding market

Although new ship orders have significantly declined this year, the investment in new shipbuilding this year is almost flat compared to last year. Record-breaking orders for LNG carriers and container ships have driven up the overall ship prices, and China's contribution is indispensable behind this achievement. Chinese shipowners have become the biggest "financiers" in the new shipbuilding market this year, while Chinese shipyards are the biggest winners.

Clarkson stated in its latest report released recently that, as of now, the total investment in new shipbuilding this year is approximately US$85.6 billion, with a year-on-year decrease of only 2%. In contrast, Clarkson's data from early October showed that new ship orders in the first nine months of this year amounted to 30.34 million CGT, a decrease of approximately 32% compared to the same period last year.

The report points out that this year's new shipbuilding investment is mainly concentrated in the LNG carrier and container ship sectors, with a record-breaking total investment of US$27.4 billion for new LNG carrier orders, accounting for 32% of the total new shipbuilding investment, a significant increase of 76% compared to 2021; meanwhile, the total investment in new container ship orders reached US$24.6 billion, accounting for 29%; followed by offshore vessels, mostly wind power-related vessels, with a total investment of US$10.3 billion, accounting for 12%.

It is worth mentioning that the total investment in new car carrier orders this year reached US$4.1 billion, marking the highest level since 2007, accounting for 5% of the total new shipbuilding investment.

Data shows that Asian shipowners became the main investors in the new shipbuilding market this year, spending a total of US$31.2 billion on new ship orders, accounting for 36% of the total investment; European shipowners invested US$30.3 billion, accounting for 35%. By country, Chinese shipowners ranked first in investment, totaling US$12.2 billion (accounting for 14%); followed by Japanese shipowners with US$9.0 billion (11%), Italian shipowners with US$6.5 billion (8%), and Greek shipowners with US$6.4 billion (7%).

In terms of shipyard order intake, Chinese shipyards are the biggest winners in this year's new shipbuilding market, having secured a total of US$38.3 billion in new ship orders (524 vessels, 13.27 million CGT), accounting for 45% by investment amount, with 32% of the order value coming from domestic shipowners. South Korean shipbuilders, ranking second, secured a total of US$35.0 billion in new ship orders (239 vessels, 13.22 million CGT), accounting for 41%.

Clarkson analyzes that the high total new shipbuilding investment stems from multiple factors. On the one hand, due to cost pressures on shipyards and the depletion of berth availability, new shipbuilding prices have continued to rise. Clarkson's Newbuilding Price Index has increased by 5% this year to 162 points, and the average level in 2022 was 13% higher than the 2021 average. On the other hand, the vessel types ordered by shipowners are mostly high-value-added vessels, with LNG carriers and container ships accounting for 44% of this year's new ship orders. At the same time, shipowners' investments in alternative fuels and energy-saving technologies have also contributed to the rise in ship prices. 62% of the new ships ordered this year (by CGT) have alternative fuel capabilities, higher than 34% in 2021. At least 22% of new ship orders will be equipped with one or more energy-saving technologies.

        Furthermore, although the total investment is basically flat compared to the same period in 2021, the average price per vessel continues to increase significantly. In 2020, the average price of a new shipbuilding vessel was US$42.8 million, increasing by 32% to US$56.5 million in 2021; as of early October this year, the average building cost has reached a record US$87.0 million, a 54% increase compared to 2021, and 76% higher than the average level in the 2010s.

      Clarkson explained that this to some extent reflects the change in the new ship order vessel type mix. This year, there were a total of 131 new LNG carrier orders, accounting for 13% of this year's total orders, higher than 4% in 2021, with the average price per LNG carrier reaching US$210 million this year; in contrast, lower-cost tanker orders accounted for only 9% of this year's total orders, lower than 15% in 2021, and the average price per tanker this year was only US$36 million.