Bulker newbuilding prices at Far East yards have tipped upwards from their historic lows on the back of increased enquiry from shipowners. Brokers say that in the past four to six weeks, yards have pushed up rock-bottom prices for dry cargo tonnage by $1m to $2m in what could prove “a window” of activity in the face of increased cost pressures from rising steel and other material prices. Escalating steel prices have been particularly painful in China where yards have seen them more than double over the past year. Shipbuilders in Japan and South Korea are under similar cost pressures.

One broker spoke of the price of some dry cargo newbuildings having gone up almost “overnight” across several types of tonnage. He details that when his prospective buyer did not confirm on a yard offer by close of business, the newbuilding price had risen by $500,000 the next day. “People are trying to grab onto deals,” he said.

Market watchers say newbuilding interest is strongest for ultramax and kamsarmax tonnage, with some “boutique” enquiries in the post-panamax sector. They point to the difficulty of finding good secondhand candidates after a recent splurge in buying on the back of the recovery in the dry cargo market, and talk of “a build-up of unsatisfied demand” for tonnage. As a result, buyers have been turning to yards in Japan and China to seek out any remaining cheap newbuilding berths.

Brokers quote ultramax prices in China at $21m to $22m — starting from a period of virtually zero enquiry. In Japan, prices are currently at around $24.5m but slots are disappearing more quickly. They detail that a kamsarmax in China will cost around $24m and closing on $26m to $26.5m in Japan. Japanese yards report an increased interest in kamsarmax and ultramax bulkers, much of it from domestic trading houses that have secured employment from European and Asian operators. The deals involve medium-term, two to five-year bareboat charter contracts, including purchase options. One local broker commented: “Trading houses see current newbuilding prices as a bargain that can’t be missed. They are looking to cover their investment costs over the initial charter period then cash in through purchase options or selling or trading on in a better market in the next decade.”

A large element of the cash behind the newbuilding enquiry is said to be private investment money, with owners remaining more cautious and, often, with less access to cash. “Not everyone is a believer,” one broker cautioned. Others point out that there is still some wariness over capesizes, with Valemax tonnage still being the elephant in the room that can emerge to destroy rates in that sector. One says the surge in secondhand values that has pushed the cost of a 2010-built capesize up to $30m means that newbuilding prices of $40m to $44m could start to look attractive. “Theoretically, the maths are starting to work,” one said. “More [newbuilding] demand would be a disaster. But I’m a bit surprised we haven’t seen it yet.”