China’s 21st Century Business Herald newspaper reported today that China has placed a massive $4.5 billion order for 50 VLCCs in an effort to stimulate the struggling Chinese shipbuilding industry and secure the country’s energy supply chain independence.
The order was placed by a group of state-owned Chinese shipping companies, including China Shipping Group, Dalian Ocean Shipping Co. and China Merchants Group, the 21st Century Business Herald reports. If true, the order would give a much needed boost to China’s shipbuilding industry but would also add to a capacity glut that has hit earnings for VLCC operators.
Last week, it was reported that China Ocean Shipping Group Co., or COSCO, is also considering an order for as many as 10 supertankers. Both today’s rumored order and COSCO’s plans for new VLCCs coincide with earlier reports that the Chinese government is planning to add up to 80 new VLCCs by 2020 in order gain more control over China’s oil supply chain.
In August, China Shipping Development Co. Vice Chairman Zhang Guofa said Chinese ship operators are also in talks on forming a VLCC pool, although he admitted that the talks have been going on for three years and no deal has been reached.