Cathay Pacific Haitong: Maintaining an increase in oil transportation holdings ratings in 2026, driven by a wave of tanker orders, the boom in shipbuilding continues

The Zhitong Finance App learned that Cathay Pacific Haitong released a research report saying that in the next few years, the fleet will be tight to provide supply bottlenecks and maintain the oil transportation holdings increase rating. Prior to the Middle East conflict, oil transportation had already entered a super bull market. War risk premiums, regional disorder, and loss of efficiency during the conflict drove new highs in freight rates. The recovery of the strait can be expected in the medium term. Oil supply and demand will return to a high level. Inventory replenishment and Changjin Control Panel will be further icing on the cake. Profits will be high in the next two years. At the same time, geology provided unexpected upward options in demand, and tight fleets provided supply bottlenecks. The bank believes that the continuation of the high oil transportation boom is expected to exceed expectations. Over the past five years, the shipping boom has relayed an upward trend and orders have been placed one after another, driving the shipbuilding boom to continue to be high. It is expected that the current shipbuilding industry's capacity constraints will be better than the previous round, and 2026 will welcome a wave of VLCC orders, continuing to ensure the continuation of the shipbuilding boom.

Cathay Pacific Haitong's main views are as follows:

Over the past five years, the shipping boom has relayed an upward trend and orders have been placed one after another, driving the shipbuilding boom to continue to be high.

Over the past few decades, the shipping boom has driven the shipbuilding cycle twice. In the first round, since China joined the WTO in 2002, the rise in the economy and urbanization began, driving the continued strong demand for shipping and the rise in dry bulk cargo/shipping/oil transportation. Shipowners' consistent expectations for the continued high boom began with a wave of orders placed in 2006, driving the shipbuilding boom upward. The shipping boom declined rapidly in 2009-19 and continued to be sluggish. Shipbuilding production capacity peaked after two years and experienced capacity clearance and industry concentration, leaving a deep memory and far-reaching impact on the industry. In the second round, the boom in the shipping sub-industry continued to rise in the past five years, and large-scale orders were placed for container ships/LNG carriers/Ro-Ro ships/finished tankers/crude oil tankers. Increased shipyard order coverage supports a high shipbuilding boom. Compared with the previous cycle, it is expected that the shipbuilding industry's capacity constraints will be better than in the previous round. The upward trend in this round is more steady and the boom is more sustainable.

Shipyard order coverage: It has remained high since 2026, and new orders have been scheduled until 2030.

In the past five years, the scale of orders in hand by shipyards has grown rapidly, while the expansion of shipbuilding production capacity has been relatively slow, and shipyard order coverage (current orders/new ship deliveries in the past year) has continued to increase. Global shipyards have remained high for 4 years in 2024, and China's shipyards have remained high for 5 years in 2025, and 2026. Currently, the new order schedule has reached 2030. Increased shipyard order coverage supports the upward trend in shipbuilding. The new shipbuilding price index has continued to rise since 2021. 2024Q3 is close to the high point of the previous cycle (August 2008). Prices for new ship types may have remained high in 2025-26, or reflect differences in shipowners' intentions to place orders: large container ships took the lead in surpassing the previous high point, and are still significantly higher than the previous high in 2026; the finished tanker MR has been rising steadily over the past year; crude oil tanker VLCC has been rising steadily over the past year; dry bulk carriers are still below the high point of the previous round.

New ship orders: 2026 will welcome a wave of VLCC orders to continue to ensure the continuation of the shipbuilding boom.

Considering the replacement of old ships and environmental regulations, it is expected that large-scale new ship orders can still be expected in the next few years. Based on long-term industry observations, expected return on investment is the key for shipowners to place orders. Shipping companies and large-scale ships have achieved a desire to continue to place orders. Tanker/dry bulk shipowners are generally assessed based on a single ship return model, and freight rate expectations are the core. The share of in-hand orders in the shipping industry rose further to 21.7% in 2026. Among them, container ships, crude oil tankers, and dry bulk carriers were 39.8%, 27.6%, 20.3%, and 14.2%, respectively. Since 2026, crude oil tankers have ushered in a wave of orders. VLCC has placed 168 new orders, mainly for European shipowners. Currently, there are 930 VLCCs in the world, of which 169 have been sanctioned, and 21% are old ships over the age of 20. Considering that 26% of VLCC ships will be over 20 years old in the next five years, new ship deliveries will only guarantee a basic stable supply of compliant capacity in mainstream markets in the future. Since 2026, geopolitical conflicts have driven the oil boom to a new high, and VLCC's five-year lease has exceeded 50,000 US dollars/day. If oil carriers and bulk carriers continue to agree on optimistic expectations about the high boom in the future, traditional shipowners may be expected to continue to place large-scale orders.

In the next few years, the fleet will be tight to provide supply bottlenecks and maintain the oil transportation holdings increase rating.

Prior to the Middle East conflict, oil transportation had already entered a super bull market. War risk premiums, regional disorder, and loss of efficiency during the conflict drove new highs in freight rates. The recovery of the strait can be expected in the medium term. Oil supply and demand will return to a high level. Inventory replenishment and Changjin Control Panel will be further icing on the cake. Profits will be high in the next two years. At the same time, geology provided unexpected upward options in demand, and tight fleets provided supply bottlenecks. The bank believes that the continuation of the high oil transportation boom is expected to exceed expectations.

Risk warning: Geographical conflict, economic and industry regulation, failure to implement environmental policies as expected, etc.