HK Stock Market Move | COSCO Shipping Energy Transportation (01138) rises nearly 3% in the morning as VLCC charter rates remain high. Owners' sentiment is high and optimistic about the future market.

COSCO Shipping Energy Transportation (01138) rose nearly 3% in the morning and, as of the time of writing, rose 2.27% to HK$11.25, with a turnover of HK$114 million. On the news front, according to a report by Zhongjin Research, VLCC rental rates for 1-3 year terms have risen rapidly since November, with the 1-year rental rate exceeding the highest point since the 2022 Russia-Ukraine conflict. This reflects the consistent expectations of ship owners and renters in the industry for a continuous upward cycle in the future oil shipping market. Considering the tight supply side of VLCC (with a high proportion of old vessels and new supply used for old vessel replacement), the increasing demand from Europe and the US for compliance market demand due to intensified sanctions on Russian and Iranian oil exports, as well as the potential increase in domestic crude oil imports and warehouse demand, we are optimistic about the prosperous market conditions for VLCC in the next 2-3 years. Guotai Haitong pointed out that in the past two months, the effects of increased production of Middle East and South American crude oil have become apparent, and the US increased sanctions on Russia have led India to reduce Russian oil imports in favor of the Middle East Gulf, directly benefiting compliant VLCC and achieving a surge in freight rates. In recent weeks, there have been concentrated shipments from the Middle East, with high spirits among ship owners regarding the future market, and some ports affected by typhoons impacting turnover efficiency. Last week, the Middle East-China route VLCC-TCE jumped again to over $120,000, hitting a new high. The bank expects profits for crude oil tankers in the fourth quarter of 2025 to hit a ten-year high.