Yards bask in box ship order boom, but rising costs could squeeze profits

摘要

MSI's QI 2021 Containerships Report has seen a major revision to its newbuilding prices forecast, driven by changes to the key factors that drive shipyard pricing. First, there has been an outbreak of exuberance in the newbuilding contracting market that has led us to revise up our estimates for new orders in both 2020 and 2021.Second, shipbuilders are facing a massive cost squeeze in QI 2021 as rising steel prices and the weak dollar combine to devastating effect. Taken together, these factors have caused a major rebalancing of MSI's shipbuilding model, boosting shipyard Forward Cover by 17% and its index of shipyard costs by 7% in 2021.The impact of either would have been significant, but together they provide sharp upward pressure. It remains the case that in a period of flux, broker indications of underlying newbuilding prices remain contested, and we are seeing a serious divergence in opinions. At present, the exact scale of the price reversal is not clear, and we have followed our model in setting levels for 2021.