Japanese shipbuilders are seeking significantly higher prices for handysize and ultramax bulk carrier newbuildings, according to local reports. The war in Ukraine has stoked up concerns among the country’s yards that steel and other material prices are set to increase and encouraged them to seek higher prices to protect against future inflationary pressures. Early deliveries for 2024 are commanding a significant premium as dock space is limited.

According to local specialist paper Japan Maritime Daily, Japan’s bulker yards have achieved prices close to $33m for a 38,000-dwt handysize bulk carriers, for early delivery in 2024, and $38m for 68,000-dwt ultramax bulk carrier. Later deliveries in 2025 are priced at lower levels. Such price levels represent a considerable mark up on the current average prices listed by broker Clarksons of $29.5m for a handysize bulk carrier, and $32.5m for a 62,000-dwt bulk carrier.

Although newbuilding negotiations for handysize and ultramax bulkers are underway, actual contracting in the bulk sector has been low over recent months. Clarksons reports an 86% reduction in bulker newbuilding activity so far this year, compared to the levels achieved in 2021.

The Ukraine crisis has also had a major effect on the value of the Japanese Yen against the US Dollar which strongly influences the ability of Japanese bulker yards to compete against their main rivals in China. The Japanese Yen recently devalued to a six-year low of ¥120 to $1 on the currency exchange markets. The immediate impact of the devaluation is that it makes Japanese shipbuilders more competitive in the international export market for ships. It also benefits yards by increasing Yen income for instalments on ships that have already been ordered and are under construction. But the fall in the value of the Yen could also have a longer-term negative impact. It also pushes up the cost of imported materials and equipment and adds to domestic inflation and shipyard’s overall cost burden.