close
We've brought all our trackers and market indices together in a single hub page. Please Register and Login to access this free content.
Correction in newbuilding prices likely to deepen
Newbuilding prices started softening in early 2025, and we expect this downtrend to continue as the lack of clarity around IMO regulations will keep new orders subdued, increasing the competition among yards.
Despite a sharp decline in steel prices from the highs of 2021, newbuilding prices surged about 50% between 2020 and 2024 as capacity utilisation of quality yards remained high due to strong ordering which increased the bargaining power of yards. Although the ongoing weakness in new orders since the beginning of this year has resulted in some softening in newbuilding prices, newbuilding prices are still at record high levels. We believe there is a huge scope for prices to continue declining if the current pause in ordering extends further as it will hurt the capacity utilisation of yards.
New orders normally take a pause after a period of high orders either because of oversupply or regulatory issues with newbuilding prices mirroring the trend of new orders. In the same line, new orders declined sharply across sectors in the first few months of 2025.
Likely pause in ordering to hurt capacity utilisation of yards
Newbuilding activity weakened significantly across sectors in the early months of 2025 as shipowners remained hesitant to commit to long-term investments due to several factors including elevated newbuilding prices, demand uncertainty stemming from geopolitical tensions and ongoing tariff disputes, rising scrutiny of China-built vessels amid USTR investigations, and persistent ambiguity surrounding global regulatory frameworks.
The IMO’s Net Zero Framework (IMO NZF) is adding to the complexity of investment decisions for shipowners, further dampening newbuilding activity. New orders are expected to remain subdued until at least October 2025, as the industry awaits clarity from the upcoming IMO session. While a modest increase in ordering could follow if the IMO NZF is adopted, overall activity is likely to stay below historical levels until 2027 when the IMO is expected to introduce clearer incentives for vessels using Zero or Near-Zero (ZNZ) emission fuels and technologies. Expectations of a global decline in interest rates are also prompting many shipowners to delay investment decisions, keeping new orders on hold for now.
Figure 4: Historical and scheduled deliveries*
* Includes oil tankers, chemicals, dry bulk, LPG, LNG and containers.
Source: Clarksons, Drewry Maritime Research
Conclusion
The anticipated weakness in new orders is likely to put downward pressure on newbuilding prices over the next couple of years. At the same time, with steel prices having declined significantly from their 2021 peaks and expected to remain subdued, shipyards are unlikely to face substantial cost pressures. Nonetheless, the robust orderbook across segments such as oil tankers and gas carriers will provide some relief to shipyards. With most delivery slots booked through 2027, this strong backlog may cap the decline in newbuilding prices to some extent.
© Copyright 2025 | Drewry Shipping Consultants Limited. All Rights Reserved. Website Terms of Use | Privacy Policy
