Newbuilding market, which showed flash recovery recently with a number of new orders, seems to have a long way to substantial recovery due to still lasting oversupply problem.

Song Jae-hak, analyst from Seoul-based Woori Investment & Securities said, "Recent increase in freight rates in shipping industry had positive effects on shipbuilding industry, however, oversupply and weak ship price problems are continuing."

"Hence, investment in heavy industries companies with strength in non-shipbuilding businesses like offshore and onshore plants will be profitable," he added.

"Global newbuilding ordering activity has been gaining momentum of late, but ship prices showed a further decrease, which signal bargain price competition is ongoing," said Mr Song.

Clarkson Newbuilding Price Index fell by one point on January 15th from a week earlier, to 136 points.

In contrast, secondhand ship prices showed stability with five-year-old 300,000-dwt VLCC price standing at $80m and same-age 170,000-dwt capesize bulker price at $55m as of January 15th.

Source: Asiasis

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