China Newbuilding Price Index (CNPI)
China has become the largest shipbuilding country in the world. The China Newbuilding Price Index (the CNPI) was created commensurate with this newly gained leading position. Its movements denote the trends in newbuilding prices and reflect market intelligence. The CNPI is published on a monthly basis and is supplemented by market reports with first-hand information from leading shipbrokers in China. The component vessel types refer to ships with International Association of Classification Societies (IACS) members’ classes, such as LR, GL, BV, DNV, RINA, ABS, NKK and CCS. Vessels with no IACS members’ classes are not included.
Composition of the CNPI Index
The CNPI system consists of composite indices corresponding to three categories of ships: oil tankers (the CNTPI), drybulk carriers (the CNDPI), and containerships (the CNCPI). Each index is constructed based on several vessel types as index components (see the chart below).
The overall composite index and composite indices by vessel type are measured on a point system, whereas the price indices by vessel type are measured in millions of US dollars for the English version.
Component Vessel Types
Two rules are followed when selecting component vessel types: the vessel types must be "mainstream" and the designs "forward-looking". The "mainstream" rule dictates that a tonnage (capacity) range be determined on the basis of quantities of new deliveries, new orders and orderbook level. A specific tonnage (capacity) is then selected due to its "forward-looking" design. The definition of the base vessel type depends on over a dozen parameters which are only made available to paid users of this website. Tonnage (capacity) ranges and base tonnage (capacity) are given as follows:
Medium Range, MR: Tonnage range 40,000-59,999dwt; Base tonnage 52,000dwt, Product
Large Range 1, LR1: Tonnage range 60,000-79,999dwt; Base tonnage 73,000dwt; Product
Large Range 2, LR2: Tonnage range 80,000-119,999dwt ; Base tonnage 114,000dwt; Product
SUEZMAX: Tonnage range 120,000-199,999dwt ; Base tonnage 163,000dwt; Crude
VLCC: Tonnage range 200,000-320,000dwt，Base tonnage 320,000dwt ; Crude
Handysize: Tonnage range 30,000-39,999dwt，Base tonnage 38,800dwt
Ultramax: Tonnage range 60,000-65,000dwt，Base tonnage 64,000dwt
Panamax: Tonnage range 70,000-79,999dwt，Base tonnage 76,000dwt
Kamsarmax: Tonnage range 80,000-89,999dwt，Base tonnage 82,000dwt
Capesize: Tonnage range 150,000-199,999dwt，Base tonnage 181,000dwt
Newcastlemax: Tonnage range 200,000-219,999dwt，Base tonnage 205,000dwt
2200Teu：Capacity range 1,000-3,000teu; Base capacity 2,257teu
4800Teu：Capacity range 3,500-5,500teu，Base capacity 4,785teu
9000Teu: Capacity range 8,000-10,000teu，Base capacity 8,957teu
Standard Method of Payment
Apart from standard base vessel types, another key feature of the CNPI is that it has a strict definition of the method of payment and the component shipyards. Departure from these definitions can cause distortions in the true market prices. The CNPI base payment schedule is 10%x4+60%. Any other variations are converted into the equivalent schedule in order to ensure representativeness and consistency of the index.
Certain criteria are set for grading the shipyards, and shipyards that meet the requirements enter the list of component shipyards. The price assessment made by the panelists is based on the component shipyards only.
Adjustments for Non-Standard Vessel Types
Members of the CNPI panelists can make certain adjustments to the prices of non-standard vessel types based on their technical knowledge and experience. The CNPI Editorial Board has established a set of rules governing the adjustments made to the price indices. This is despite the fact that all panelists are senior shipbrokers with proven track records, reputation and recognized capability. As an example of adjustments, LR1 and LR2 in the index system are product tankers but if the sample ships referred by the panelists are crude carriers, the panelists are recommended to make appropriate adjustment.
The Index Compilation Process
The panels of the Index Company are made up of eighteen(18) most active Chinese and foreign ship brokerage houses. It has three index panels on oil tankers, drybulk carriers and containerships, respectively. Panelists issue assessment of the current newbuilding prices to the Editorial Board according to the reporting procedure and rules on the 30th day of each month. The assessments are examined by senior maritime experts of the Editorial Board and are then fed into the index calculating system to produce the current period index values.
A Fair and Professional Index
In order to ensure the fairness of the CNPI, the Index Company is made up of independent ship brokerage houses. No other interest groups are involved (e.g. ship-owners, shipyards, and financial institutions). They are international shipbrokers with a long history and good reputation, or fast-growing Chinese shipbrokers with widely recognized track records and reputation. Compared to other interest groups, shipbrokers not only have close access to market intelligence, but also could represent either the seller or the buyer. Therefore, they are likely to be amenable to the interests of both sides. (This is why it is an international convention to have brokers issue price assessments.) Members of the Index Company are all specialized shipbrokers with leading positions in terms of brokered transactions. Their price assessments are representative of the true market levels. Assurance of high technical standards is given by the fact that price assessments are issued and subsequently examined by a group of maritime professionals with long careers in the industry and deep understanding of the market and technical knowledge.