Chinese yard signs 20 supertankers for COSCO units, 16 of them to be paid in cross-border yuan

What was signed? Dalian Shipbuilding Industry (大连船舶重工), a wholly owned subsidiary of China CSSC Holdings (中国船舶), has signed contracts together with China Shipbuilding Industry Trading for 20 very large crude carriers (VLCCs) of 307,000 deadweight tonnes each, the listed company disclosed on November 11. Four ships are for Hainan COSCO Shipping Energy Transportation, a unit of COSCO Shipping Energy (中远海能), priced and paid in onshore yuan for 3.793 billion yuan including tax. The other 16 are for Dongfang Fuli International (东方富利), a unit of COSCO Shipping Development (中远海发), priced and paid in cross-border yuan for 13.425 billion yuan excluding tax. The 17.218 billion yuan headline total adds a tax-inclusive and a tax-exclusive figure. Deliveries run from 2029 to 2030, and the contracts take effect only after all parties complete approval procedures, according to GMT Eight.

Are all 20 ships new orders? No. The four Hainan ships are the Dalian part of a 10-VLCC order that COSCO Shipping Energy's board approved on November 9 at 948 million yuan per ship including tax: six at COSCO Shipping Heavy Industry (Yangzhou), due between August 2029 and November 2030, and four at Dalian, due between September 2029 and May 2030, according to the board resolution and Seatrade Maritime. The same board approved bareboat-chartering 14 newbuilt VLCCs from six Chinese financial leasing companies for up to 20 years, with total rent capped at 17.4 billion yuan, and a separate 16-VLCC long-term leasing project that will be disclosed once agreements are signed. The filings do not say whether those 16 are the ships Dongfang Fuli has just ordered.

Why are Chinese owners ordering now? Tanker earnings are high. CNSS (海事服务网) reported on November 11 that Evercore ISI raised its 2026 VLCC earnings forecast by 97% to 215,000 dollars a day, with analyst Jonathan Chappell attributing much of the strength to Middle East geopolitical disruption and saying earnings may ease in 2027. The same report cites Hartland Shipping Services expecting more than 100 VLCC deliveries in each of 2028 and 2029, and BRS counting 283 VLCCs on order for delivery from 2028.

What does it mean for crude trade with China? The order lands as China buys less crude: through October, China imported 400 million tonnes of crude oil, 15.1% less by volume, according to customs data. Broker Braemar said high freight costs are leading some Asian refiners to choose shorter-haul Middle Eastern crude over cargoes from the Atlantic basin, CNSS reported. For Chinese yards, the contract adds to an order book that already gave China 81.8% of global new ship orders from January to September.

CSP view: these tankers will not ease freight before 2029. For crude exporters and traders on the Atlantic side, the near-term issue is today's freight and the shift of Asian refiners toward nearer suppliers; the longer-term one is the wave of VLCC deliveries brokers expect in 2028 and 2029. The cross-border renminbi payment is the detail to note for anyone negotiating currency with Chinese counterparts. This reading is ours, not the companies'.