HK Stock Market Move | COSCO Shipping Energy Transportation (01138) fell nearly 6% at the close, as VLCCs showed more ships than cargoes. Institutions suggest that part of the capacity is idle, supporting freight rates.

COSCO Shipping Energy Transportation (01138) fell nearly 6% at the close, dropping 5.84% to HKD 16.77 as of press time, with a turnover of HKD 3.7 billion. In terms of news, since the US-Iran conflict, the blockade of the Strait of Hormuz has restricted Middle East exports, and with limited increases in crude oil exports from the Gulf of Mexico and other long-haul routes, VLCCs are facing a situation of more ships than cargo. From March to May, the total cargo volume for VLCCs decreased by 54% year-on-year. However, according to Frontline statistics, as many as 55 VLCCs are stubbornly loitering empty outside the Gulf of Mexico, refusing to go to the Atlantic China Welding Consumables, Inc. basin to compete for cargo. The CEO of Frontline believes that idle capacity and refusal to operate are causing VLCC spot rates to remain high. Guosen pointed out that currently, the traffic volume in the Strait of Hormuz remains at a low level. Against the backdrop of the strait blockade, the oil transportation market is generally in a situation of oversupply, and with the current off-peak season, the fluctuating trend of oil transportation rates is stable. The bank believes that the current oil transportation rates are still at a bottom support level. The short-term resumption of traffic in the strait, combined with the demand for crude oil shipment and the control of Longjin Shipping's capacity, is expected to drive rates rapidly higher in the short term.