Outlook for the global shipbuilding industry

In the first eight months of 2012, the global order cover dropped by 20 percent to 19 months of workload. A total of 13 million compensated gross tonnes (cgt), or 30 percent of yard capacity, was contracted. A total of 9 percent of the global shipbuilding capacity will probably be taken out of use in 2013, followed by a potential 11 percent closure in 2014 in case of lower contracting activity, the institute estimated. The institute expects a 20 percent fall in the global yard capacity in the next three years, mainly due to fact that small and medium-sized shipyards will become inactive. This reduction in capacity will mean the order cover will return to the 2008 level by the end of 2014. Newbuilding prices reflect the orderbook of shipyards and have now on average dropped by over 40 percent from the peak levels in 2008. However, prices are still 35 percent higher than the low point reached in 2002. The institute believes that there is a limited potential for a further price decline.