Shenwan Hongyuan Group Co., Ltd. has released a research report indicating that the current one-year time charter rate for VLCCs has risen to $140,000 per day, reflecting tight market supply and persistently high shipbuilding activity. The five-year secondhand vessel price for VLCCs has now surpassed the newbuild price, with a strengthening backwardation structure, signaling shipowners' optimism about future market conditions, which is expected to accelerate new vessel orders. Newbuild prices for oil tankers have shown positive month-on-month growth for four consecutive months from November 2025 to February 2026. As different vessel types share shipyard capacity, the high volume of tanker orders is anticipated to drive a broad recovery in newbuild prices. Key views from Shenwan Hongyuan are as follows:
The high activity in the tanker market is accelerating its transmission to the shipbuilding sector. Spot rates and time charter rates for VLCCs remain elevated, while secondhand vessel prices continue to climb, reflecting strong market conditions. Supply-side constraints in the oil shipping market are clear, and demand-side dynamics include shifts between dirty and compliant oil trades, supporting a medium-term upward trend. The current one-year time charter rate for VLCCs has reached $140,000 per day, indicating sustained tight supply and robust market activity.
Amid high market optimism, shipowners are accelerating orders, with tankers being the primary source of new shipbuilding contracts for two consecutive months. Hengli Heavy Industry is the most direct beneficiary of the surge in tanker orders and possesses continuous order-receiving capability. It holds the largest global orderbook for VLCCs. While most major shipyards are operating at full capacity, Hengli Heavy Industry, which is still ramping up production, stands out in its ability to secure new orders. Since 2026, Hengli Heavy Industry has secured orders for over 40 VLCCs, with its orderbook value rapidly increasing from $19.5 billion at the start of the year to $26 billion, making it the most direct beneficiary in the shipbuilding sector from the strong oil shipping market.
The company maintains sufficient capacity for continued order intake. Several production lines are still under construction and not yet operational, and its multi-vessel construction model enhances production capacity. The current orderbook does not fully utilize its future capacity, indicating room for additional orders.
Secondhand vessel prices continue to recover, with the asset value term structure for some vessels already in backwardation. Newbuild prices are showing signs of stabilization and are expected to rise subsequently. The secondhand vessel price index has been rising since February 2025, marking 12 consecutive months of increase. The five-year secondhand price for VLCCs has exceeded the newbuild price, and the backwardation trend is intensifying, reflecting shipowners' positive outlook and likely accelerating new orders.
Newbuild prices for tankers have entered a recovery phase, which may lead to an overall increase in the vessel price index. Oil tanker newbuild prices have recorded positive month-on-month growth for four months from November 2025 to February 2026, suggesting continued sector strength. Bulk carriers have not seen a wave of orders in this cycle, but with an aging fleet, replacement demand remains substantial. Container ships are now in a new round of capacity expansion, and their sustained ordering potential is underestimated. As different vessel types compete for shipyard capacity, the high density of tanker orders is expected to lift overall newbuild prices.
Regarding investment targets, China Shipbuilding Industry Company Limited (600150.SH) and COMEC (00317) have orderbook values of approximately RMB 66.4 billion and $9.1 billion, respectively, with market-cap-to-orderbook ratios of 0.51x and 0.28x, which are relatively low by historical standards. Attention is also on ST Songfa (603268.SH), Sumec (600710.SH), Yangzijiang, and China Dynamics (600482.SH).
Risks include new order intake for commercial shipbuilding falling short of expectations, a downturn in shipping market conditions, significant increases in raw material prices such as steel, a substantial appreciation of the Renminbi, and intensified industry competition from new entrants such as Southeast Asian countries.
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