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Price Formation of Dry Bulk Carriers in the Chinese Shipbuilding Industry


  • Liping Jiang

    () (Department of Environmental and Business Economics, University of Southern Denmark)


In this paper we present, for the first time, the price formation of China’s dry bulk carrier using vessel prices quoted by major Chinese shipyards in actual shipbuilding orders. This allows us to investigate the relationship of price and determinants in the Chinese shipbuilding industry by including generic market factors as well as Chinese elements. The analysis, employing Principal Component Regression (PCR) approach, indicates that the time charter rate has the most significantly positive impact. While increases in other four factors, namely shipbuilding cost, price cost margin, shipbuilding capacity utilization and credit rate, have descending order of positive influences. Different from traditional perception, we assert that the most important role of time charter rate plays mainly attributes to the ‘China Factor’ in bulk carrier sector. In addition, simulations are performed to investigate what would happen to the Chinese dry bulk carrier prices under changes of time charter rate and shipbuilding cost. This paper has implications for the Chinese shipyards, shipbuilding industry customers and industry policy makers. Acknowledgment - This research is partly funded by the Chinese Scholarship Council and TORM Foundation.

Suggested Citation

  • Liping Jiang, 2010. "Price Formation of Dry Bulk Carriers in the Chinese Shipbuilding Industry," Working Papers 104/10, University of Southern Denmark, Department of Sociology, Environmental and Business Economics.
  • Handle: RePEc:sdk:wpaper:104

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    References listed on IDEAS

    1. Gallouj, Faiz & Weinstein, Olivier, 1997. "Innovation in services," Research Policy, Elsevier, vol. 26(4-5), pages 537-556, December.
    2. Marina Doroshenko & Ian Miles & Dmitry Vinogradov, 2014. "Knowledge Intensive business services: the Russian experience," Foresight-Russia Форсайт, CyberLeninka;Федеральное государственное автономное образовательное учреждение высшего образования «Национальный исследовательский университет «Высшая школа экономики», vol. 8(4 (eng)), pages 24-39.
    3. Johan Hauknes, "undated". "Services in Innovation – Innovation in Services," STEP Report series 199813, The STEP Group, Studies in technology, innovation and economic policy.
    4. Henrik Herlau & HeLge Tetzschner, 2001. "Securing Knowledge Assets in the Early Phase of Innovation," Working Papers 28/01, University of Southern Denmark, Department of Sociology, Environmental and Business Economics.
    5. FaÏz Gallouj, 1994. "Economie de l'innovation dans les services," Post-Print hal-01111989, HAL.
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    Price Formation; Dry Bulk Carrier; Chinese Shipbuilding Industry;

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