Investing should focus on Golden麒麟 analyst research reports, which are authoritative, professional, timely, and comprehensive, helping you uncover potential thematic opportunities! OPEC has shifted its strategy from production cuts to increases in 2025, entering a substantive phase of output expansion. Concerns over potential crude oil supply disruptions have prompted China to begin replenishing its inventories. Due to expanded sanctions by the US and Europe on the shadow fleet, approximately 16% of the VLCC fleet is currently restricted. The appreciation rate for ten-year-old VLCCs has reached 85%, and the rising value of the fleet is boosting stock valuations. As the oil shipping market moves towards a compliance-driven bull phase, COSCO SHIP ENGY H-shares remain the preferred choice.
Increased production by OPEC is a necessary condition for the oil shipping bull market. The Russia-Ukraine conflict has altered the global crude oil supply landscape. Constrained by restrictions on Russian oil, countries like the EU have significantly reduced their reliance on Russian supplies, which have instead been redirected to Asian markets. Concurrently, other oil-producing nations such as the US and Brazil are ramping up production, while some African countries have exited OPEC, leading to a gradual decline in OPEC's market share. This shift has, in turn, created room for other nations to increase their output. Entering 2025, OPEC has abandoned its previous production cut strategy, pivoting towards output increases and moving into a tangible expansion phase. Although increased production does not automatically translate to higher seaborne crude exports, observed data on actual maritime trade volumes since August has indeed shown an increase, effectively driving a significant rise in crude tanker freight rates.
Fearing potential crude oil supply disruptions, China has commenced inventory replenishment. Although China's seaborne crude oil imports were sluggish in 2024 and early 2025, the trend in recent months has strengthened, with third-quarter import volumes growing 5% year-on-year. Robust refinery throughput has provided additional impetus for imports. The average daily crude processing rate this year reached 14.8 million barrels, a 3% increase year-on-year, with third-quarter processing volume surging 7% compared to the same period last year. This momentum was supported by increased import taxes on fuel oil and asphalt in the first half of the year, prompting independent refiners to process more crude oil. Growing demand for petrochemical feedstocks has also played a supportive role, alongside a reduction in refinery maintenance schedules in recent months, particularly at state-owned facilities. Significantly accelerated inventory activities and increased refinery throughput have driven stronger import demand. The rise in China's freight volumes has also provided underlying support for the crude tanker market this year. China's crude inventory coverage days have increased to 110 days, with strategic petroleum reserves plus commercial inventories growing by 150 million barrels so far, valued at approximately $10 billion. Future coverage is expected to reach 140-180 days, primarily due to: (1) current oil prices being at historically relatively low levels, offering a window for strategic purchases; (2) the new "Energy Law" effective in 2025, which mandates that both state-owned and private enterprises share strategic reserve obligations, creating institutional impetus for accumulation; (3) approximately 20-30% of oil imports originating from countries subject to US and European sanctions, posing supply disruption risks, making increased reserves a preparation for potential crises (including geopolitical tensions); (4) a substantial current account surplus providing the foreign exchange necessary for crude purchases. Ongoing expansion of refining capacity (projected to exceed 18 million barrels per day by 2026) underpins crude demand. The sustained inventory momentum is likely to support import volumes through 2026, with state-owned oil companies planning to add a further 169 million barrels of crude storage capacity. Furthermore, a potential further moderation in oil prices could also provide support. China's seaborne crude oil imports are initially forecast to grow 3% next year to 10.7 million barrels per day, but there exists potential for further upside.
Expanded sanctions are further reducing effective shipping capacity. Due to widened sanctions by the US and Europe on the shadow fleet, particularly since early 2025, the US has intensified its crackdown, leading to a contraction in effective market capacity. This has pushed up the central level of freight rates and increased their elasticity during peak seasons. Currently, approximately 16% of the VLCC fleet is classified as restricted vessels, with the proportion of Aframax tankers closely associated with Russia reaching as high as 33%.
The appreciation of fleet value is driving up stock valuations. Although newbuild prices have recently seen some decline, the overall transaction value of second-hand vessels continues to rise, partly related to the substantial recent increase in charter rates. Assuming a ten-year-old vessel had a newbuild price of around $95 million in 2015, and calculating depreciation over 20 years without considering scrap value, its current book value would be $47.5 million. However, its market value has now reached $88 million, representing an appreciation rate of 85%.
1) Global macroeconomic recovery falls short of expectations. Amid multiple factors including escalating geopolitical conflicts, intensified supply chain challenges, and persistently rising inflationary pressures, uncertainty surrounding the global economic recovery remains significant, and recovery efforts continue to face substantial difficulties. Should the global macroeconomic recovery severely underperform expectations, worldwide logistics and transportation demand could experience a sharp decline. 2) Intensifying price war in the express delivery industry. Under current local express delivery price regulatory policies, the price war in the sector has subsided. However, capacity expansion by express delivery companies has not yet been fully realized. If industry demand falls short of expectations or during off-peak seasons, failing to meet the overall industry capacity utilization rate, there is a risk that the price war could reignite and intensify. 3) Logistics resource cost increases exceed expectations. During the express delivery price war, delivery fees were significantly reduced, leading to decreased income for frontline couriers. Currently, many regions in China have introduced policies aimed at safeguarding couriers' incomes. Combined with persistently rising labor costs, there is a possibility that labor cost increases for express delivery companies could surpass expectations. 4) High-speed rail construction pace falls short of expectations. During the rapid development of high-speed rail in recent years, some regions witnessed盲目 construction of high-speed rail and subways, characterized by an overemphasis on high-speed over conventional rail and on investment over output. This has led to significant operational challenges and doubled debt pressures for railway enterprises. If operational issues persist for some completed high-speed rail lines, it could result in a slowdown in high-speed rail construction and a delayed national network integration process. This, in turn, might lead to a prolonged imbalance in the national high-speed rail network beyond expectations, causing a slowdown in performance improvement for high-speed rail companies. Competition risk from other transportation modes: High-speed rail offers advantages such as high punctuality, large passenger capacity, economic comfort, and minimal impact from natural weather conditions. From 2016 to 2019, the Beijing-Shanghai high-speed rail line continuously optimized its train schedules, steadily increased seat occupancy rates, and improved service quality, creating a differentiated competitive landscape against road and air passenger transport. However, if the road network continues to expand and improve, and if air travel punctuality and service levels keep rising, passenger travel choices could still be affected. A significant impact on passenger turnover would adversely affect company operations.
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