China Ocean Shipping Group Co., the nation’s biggest ship operator, is considering an order for very large crude carriers as the country’s economic growth spurs oil imports.
The plan is at the “ideas and research” stage, Meng Qinglin, managing director of tanker arm Dalian Ocean Shipping Co., said by text message today. The decision on the order will depend on factors including the company’s internal resources, market demand and costs, he said in a separate message.
The state-owned shipping group may order 10 supertankers, maritime newspaper Lloyd’s List said yesterday, citing an unidentified person at Cosco Dalian. China, the second-largest crude consumer after the U.S., has boosted oil imports 66 percent over the past five years as domestic production has failed to keep pace with rising demand.
Any order would probably be tied to a long-term charter contract, so it may not have a big impact on the spot market, where overcapacity has hit rates, said Richard Park, an analyst at Korea Investment & Securities Co. in Seoul.
“It’s unlikely that Cosco Group’s order will undermine sentiment because they will use those vessels for China,” he said. “Still, it would make sense for them to charter vessels because there is an abundant supply out there.”
VLCC returns have been negative on the benchmark Saudi Arabia-to-Japan route since July 5, according to data from the London-based Baltic Exchange. The ships, each able to hold 2 million barrels of crude, are losing $1,437 daily, its data showed.