China Increases its Dominance

Last year, the shipbuilding market continued to flourish despite increasing delivery times and higher prices that showed no signs of weakening. One striking feature of 2024 was that China significantly grew its orderbook, boosting its share of the global shipbuilding market by 9.7%, further solidifying its dominant position at the expense of Japan (-4.3%) and South Korea (-5.1%).

New orders surged by more than 50% (Dwt basis) compared with 2023, which had already seen a 37% increase on 2022. Meanwhile, robust market conditions discouraged owners from recycling their older tonnage.

In the wake of strong ordering, new vessel prices continued the upward trend that had begun in 2021. Prices rose over the year and only started to plateau in the last quarter, although this depended on the type and size of ship ordered. The tanker market in particular experienced consistent price hikes throughout 2024, driven by ongoing demand.

Orders from the previous year helped to extend the workload for shipyards, and the continued strong demand for fresh tonnage pushed delivery timelines well into 2028. This drove the average expected delivery time for available slots to more than four years. We observed the same trend in 2023, but the willingness to go beyond the historically comfortable limit of three years became even more prevalent in 2024.

The scarcity of early delivery slots was the source of much discussion throughout the year. Indeed, tight delivery slot supply in this booming newbuild market drove prices higher for any possible earlier slots. This prompted some previously inactive Chinese shipbuilding facilities to ramp up production. Accordingly, dormant yards including Rongsheng reawakened and entered into new contracts subject to obtaining certain securities. On this note, the main engine manufacturers have increasingly become a bottleneck concerning delivery slots. A shipyard can lease all the facilities it desires to offer early slots, but no ship will be delivered without a main engine.

Discussions regarding the propulsion choice continue, notably around which offers the best assurance that an asset remains future-proof. Liquefied natural gas (LNG), methanol and ammonia are the most favoured alternatives, with options to either fully fit these systems or, as some prefer, to maintain more flexibility in their future decisions by opting for a dual fuel-ready notation.