Guotai Haitong: Maintain overweight rating on oil shipping; sustained high prosperity will exceed expectations.

Guotai Haitong released a research report stating that market changes are expected to increase compliance demand, accelerate the scrapping of old ships, and create an ultra-high prosperity that is sustainable. Oil shipping has entered a high-prosperity phase, and the escalation of the Middle East situation in 2026 provides an opportunity for gray market changes. It is recommended to pay attention to the continued impact of gray market changes. Oil shipping is expected to see ultra-high and sustainable prosperity, providing room for both performance and valuation. The main points of Guotai Haitong are as follows: Freight rate tracking: Oil shipping rates have continuously hit new highs, the container Europe route has weakened while the US route continues to rise 1) Crude oil shipping: Compliance capacity efficiency losses and high shipowner confidence have pushed freight rates to consecutive new highs. Geopolitics strengthens the medium- to long-term logic; 2) Product oil shipping: Asia-Pacific regional product oil trade has recovered, and eastbound freight rates have risen continuously. The long-term trend of refinery relocation to the East continues; 3) Dry bulk shipping: The Pacific region ore cargo volume has weakened, and freight rates have slightly retreated from highs. In the future, attention should be paid to Simandou production increases; 4) Container freight rates: Peak-season cargo volume is stable, Europe route freight rates continue to fall, and canal low water levels support continued increases on the US route. Pay attention to demand. Oil shipping: Two stages create a "super bull market" First stage: Geopolitical conflicts drive the restructuring of global crude oil trade. Russia and Europe "seek far while abandoning the near," lengthening voyage distances, driving oil shipping prosperity upward across years for more than three years, and capacity utilization has risen to the threshold. The second stage begins: Global crude oil production increases begin, driving continued growth in oil shipping demand. The rigid effective supply of tankers continues, and future supply and demand will continue to improve with upward prosperity, and there is an unexpected option from gray market changes. Dry bulk: Long-distance iron ore production increases begin, and prosperity is expected to gradually rise In 2021-22, benefiting from the ultra-high prosperity of the container shipping industry and demand spillover, container-to-bulk switching drove freight rate performance. In 2023-24, post-pandemic recovery growth drove a moderate rise in dry bulk shipping prosperity. The global iron ore production increase cycle has begun, especially the super-large Simandou project has been put into operation and will continue to increase production. Demand growth exceeding expectations is anticipated. In the coming years, supply will grow at a low rate, and prosperity is expected to gradually recover. Container shipping: Tariff easing returns to a new normal, pay attention to the new China-US trade landscape Over the past five years, there have been two rounds of high prosperity, and the profit base has risen. In the first half of 2025, China-US tariff friction caused short-term large fluctuations in trade and freight rates. In Q3, trade returned to normalization and the mainline peak season was not strong. In the coming years, the mainlines will again face ship upsizing and supply pressure. The suspension of Section 301 sanctions is in line with expectations. Pay attention to the new China-US trade landscape and the economic impact of energy pressure. It is recommended to continue to focus on structural growth and opportunities in the container shipping market. Risk warnings Economic risks, risks of changes in the geopolitical situation, risks in the implementation of environmental protection policies, etc.