The war in Iran continues, Chinese shipyards make a fortune

The numbers show it: China dominates the seas. The People’s Liberation Army thus possesses both the largest military fleet with over 400 ships (Defense Zone) and Beijing claims a record number of global shipbuilding orders (Journal de la marine marchande).

And the crisis in the Strait of Hormuz seems to increase pressure on fleets. With the United States and Iran effectively blocking the bottleneck, a strategic passage through which approximately a quarter of the world’s oil is transported by sea, tankers are taking longer routes to avoid risky journeys through the Persian Gulf.

Demand soaring for very large carriers

Between these new constraints and the urgency related to aging ships, shipping companies are rushing to increase their capacities, making large shipyards major beneficiaries of the conflict between the United States, Israel, Iran, and Lebanon, as noted by the South China Morning Post (SCMP).

The mounting requests target in particular the construction of very large crude carriers (VLCC), capable of transporting up to 2 million barrels of oil per trip. A boon for Chinese shipbuilders, who benefit from strong capacity, lower costs, and shorter delivery times. At least two Swiss companies and a Singapore-based company have placed orders for VLCCs with Chinese shipyards in recent weeks.

Swiss company Advantage Tankers, which had long relied on South Korean shipyards, ordered two 307,000-ton VLCCs in China. The vessels are expected to be delivered in the second quarter of 2028 and the third quarter of 2029, according to the China Ship Survey, as reported by the SCMP, without the prices being disclosed.

Simultaneously, the Geneva-based group Mercuria Energy Group, one of the world’s leading independent commodity traders, has signed shipbuilding contracts in China worth nearly $650 million. The order includes up to four VLCCs and two LR2-type product tankers, with deliveries scheduled by 2029, according to the same journal, affiliated with the China Classification Society, a state-backed maritime entity.

Singaporean company Yangzijiang Maritime Development, supported by Chinese shipbuilding magnate Ren Yuanlin, ordered eight VLCCs – its first foray into the large tanker segment – with deliveries planned between 2028 and 2030, according to company documents.

Dominant Chinese shipbuilding industry

Existing projects also benefit from this situation. Swiss company Advantage Tankers already had a 319,000-ton VLCC, the Advantage Visual, under construction in a shipyard in Jiangsu Province, with delivery expected in the fourth quarter of this year. The vessel, acquired from commodity trader Trafigura for about $119 million, is now valued at around $152 million, according to China Ship Survey.

Freight rates have also sharply increased alongside the rising demand. According to VesselValue, daily VLCC charter rates reached around $234,700 last week, up by 3.4% from the previous week.

Result? The Chinese shipbuilding industry now dominates global shipbuilding orders, outperforming established players like South Korea. The country won over two-thirds of all contracts last year, according to data from Clarkson Research. A success that Beijing can celebrate.