Summary of Key Points from the Conference Call on China Tanker Shipping Industry Overview - The tanker shipping industry is expected to remain strong through 2026, driven by elevated tonne-mile demand, low net VLCC (Very Large Crude Carrier) additions, and ongoing Chinese stockpiling [1][3][6] - The outlook becomes cautious beyond 2026 as global supply is anticipated to rise, with the VLCC orderbook now at approximately 17% of the fleet [1][3][6] Core Insights - **Earnings Projections**: VLCC earnings are expected to average around US$100,000 per day in 2026, within a range of US$50,000 to US$200,000 per day [1][3][6] - **Supply Dynamics**: The global order book has increased significantly, with Suezmax at 21% and Aframax/LR2 at 16-17% of the fleet. Over 20% of the current fleet is already 20 years or older, but scrapping typically accelerates only after rates weaken [1][3][6] - **Shadow Fleet**: The removal of the shadow fleet, which constitutes over 10% of global capacity, is seen as a potential upside but remains politically uncertain [1][3][6] Market Conditions - **Current Demand Drivers**: The demand for crude tankers is supported by geopolitical factors, including the Russia-Ukraine conflict, which has reshaped global oil flows and increased voyage distances [1][3][10] - **Chinese Stockpiling**: China's crude imports increased by 3% year-on-year, driven by strategic and refinery stockpiling, with expectations for further growth in 2026 [1][12][10] - **Spot Earnings**: Current spot earnings for VLCCs are around US$115,000 per day, with Suezmaxes at US$80,000-90,000 and Aframaxes at US$55,000-60,000 [1][10] Future Outlook - **Transition Period**: The market is expected to enter a transition phase in 2027-28, characterized by a heavy delivery cycle and potential scrapping of older vessels, particularly if sanctions on Russia are lifted [1][3][6] - **Volatility Anticipation**: The stock of COSCO Shipping Energy Transportation (CSET) is expected to remain volatile due to mixed geopolitical news and supply-related headlines [1][3][6] Additional Considerations - **Environmental Regulations**: Future environmental policies and costs associated with compliance are expected to impact older ships' economics over the next 4-5 years [1][3][6] - **Shipbuilding Capacity**: Chinese shipyards currently account for 65-70% of global oil-tanker orders, with a significant increase in shipbuilding capacity compared to previous years [1][20][22] This summary encapsulates the key insights and projections regarding the tanker shipping industry and COSCO Shipping Energy Transportation, highlighting both opportunities and risks in the evolving market landscape.