The war in Iran continues, Chinese shipyards make fortune

The numbers show it: China dominates the seas. The People’s Liberation Army thus possesses both the largest military fleet with over 400 ships (Defense Zone) and Beijing claims a record number of global shipbuilding orders (Journal de la marine marchande).

And the crisis in the Strait of Hormuz seems to further increase pressure on fleets. With the United States and Iran effectively blocking the bottleneck, a strategic passage through which approximately a quarter of the world’s oil transported by sea passes, tankers are taking longer routes to avoid risky paths through the Persian Gulf.

Demand is soaring for very large carriers Between these new constraints and the urgency related to the aging of ships, maritime companies are rushing to increase their capacities, making shipyards the main beneficiaries of the conflict between the United States, Israel, Iran, and Lebanon, notes the South China Morning Post (SCMP).

The piling demands are particularly targeting the construction of very large crude carriers (VLCC), capable of carrying up to 2 million barrels of oil per trip. This is a boon for Chinese shipbuilders, who benefit from strong capacity, lower costs, and shorter delivery times. At least two Swiss companies and a Singapore-based company have placed orders for VLCCs with Chinese shipyards in recent weeks.

The Swiss company Advantage Tankers, which had long relied on South Korean shipyards, ordered two 307,000-ton VLCCs in China. The vessels are scheduled to be delivered in the second quarter of 2028 and the third quarter of 2029, according to the China Ship Survey last Thursday, as reported by the SCMP, without disclosing the prices.

In addition, the Geneva-based Mercuria Energy Group, one of the world’s leading independent commodity traders, signed shipbuilding contracts worth nearly $650 million in China. The order includes up to four VLCCs and two LR2 product tankers, with deliveries expected by 2029, according to the same review, affiliated with the China Classification Society, a state-backed maritime organization.

The Singaporean company Yangzijiang Maritime Development, supported by Chinese shipbuilding magnate Ren Yuanlin, ordered eight VLCCs – its first foray into the large tanker segment – with deliveries planned between 2028 and 2030, according to corporate documents.

A dominant Chinese shipbuilding industry Existing projects also benefit from this situation. The Swiss company Advantage Tankers already had a 319,000-ton VLCC, the Advantage Visual, under construction in a shipyard in Jiangsu province, scheduled for delivery in the fourth quarter of this year. The vessel, acquired from commodity trader Trafigura for around $119 million, is now valued at around $152 million, according to China Ship Survey.

Freight rates have also increased significantly alongside the rise in demand. According to VesselValue, daily VLCC charter rates reached around $234,700 last week, up 3.4% from the previous week.

The result? The Chinese shipbuilding industry now dominates global shipbuilding orders, outperforming established players like South Korea. The country won over two-thirds of all contracts last year, according to Clarkson Research data. A success that Beijing can celebrate.