Not everyone in shipping could be doing as well as current headlines suggest, particularly the shipyards. Chinese demand for steel manifested itself in a rush for iron ore which triggered a dry-bulk boom in freight, with positive knock-on effects for vessel contracting and prices the yards could charge. But just as the decade-long decline in ship prices has been arrested, the price of steel is rocketing, putting a lot of pressure on shipyard costs. Along with escalating material costs, for the Japanese yards the sustained and sharp strengthening of the yen adds another headache, one they may be used to, but one that is particularly acute at the moment How Japan's yards are coping with this and what impact it will have on the bottom line remains to be seen. In terms of hedging the currency exposure, "don't overestimate how sophisticated they are" warned one broking source, with a Japanese expression translating as'What can we do about it?' heard all too frequently at the yards. While the bigger yards may have a sophisticated approach, many of the smaller, family-based yards will not.
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