- Newbuilding prices began to soften in early 2025 and are expected to decline further due to reduced ordering and uncertainty around IMO regulations.
- Despite falling steel prices, high newbuilding prices were sustained between 2020–2024 due to strong yard utilisation, but recent order weakness could erode this advantage.
- Regulatory ambiguity, economic pressures, and global interest rate trends are causing shipowners to delay new orders, impacting yard capacity utilisation.
Newbuilding prices, which started to decline in early 2025, are expected to continue their downward trend throughout the year as ongoing uncertainty surrounding the International Maritime Organization’s (IMO) evolving regulatory framework discourages new vessel orders. This decline is likely to heighten competition among shipyards as demand remains subdued.
Between 2020 and 2024, newbuilding prices surged by approximately 50%, largely due to high yard utilisation driven by strong order volumes. This gave shipyards greater bargaining power despite a significant fall in steel prices from their 2021 highs. However, with a noticeable drop in new orders since the start of 2025, the pricing momentum has reversed slightly, although newbuilding prices remain historically elevated.
New Orders Decline Across Sectors
Following a period of intense ordering activity, a cyclical pause in new orders is now evident, driven by factors such as concerns about oversupply and mounting regulatory ambiguity. According to data from Clarksons and Drewry Maritime Research, new vessel orders declined sharply across all major shipping segments in the initial months of 2025.
This softening in demand is closely mirrored in newbuilding price trends (Figure 2). Historically, ordering activity tends to contract after a surge, especially when regulations for future compliance remain unclear.
Yard Utilisation at Risk Amid Ordering Pause
Newbuilding activity has slowed significantly, impacted by several compounding factors:
- Elevated prices are deterring new investment
- Ongoing geopolitical tensions and trade barriers
- Increased scrutiny of Chinese-built vessels under USTR investigations
- The absence of clear guidelines under the IMO’s Net Zero Framework (IMO NZF)
This policy uncertainty is further delaying investment decisions by shipowners, with many expected to hold off on placing new orders until at least October 2025, when the next IMO session may provide further regulatory clarity. While adoption of the IMO NZF could trigger a modest increase in ordering, substantial growth is not expected before 2027—when the IMO is anticipated to introduce clear incentives for Zero or Near-Zero (ZNZ) emission vessels.
Furthermore, expectations of a global decline in interest rates have encouraged shipowners to delay capital expenditures, further dampening short-term order volumes.
Steel Prices and Deliveries Offer Mixed Outlook
While steel prices have fallen sharply from their peak in 2021 and are expected to remain low, reducing cost pressures for shipyards, the limited new orders risk reducing yard utilisation rates and profitability (Figure 3). Historical and upcoming delivery schedules (Figure 4) indicate that most yard capacity is booked through 2027, providing a cushion for now.
The combination of subdued order activity and regulatory indecision is poised to exert downward pressure on newbuilding prices over the next few years. Despite the fall in steel costs providing some relief, shipyards may struggle with underutilisation if new orders do not recover. That said, healthy backlogs—especially in oil tanker and gas carrier segments—should help limit the extent of any price correction through the near term.
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Source: Drewry
