COSCO Shipping Energy, a subsidiary of Cosco Shipping, forecasts a 17.2% year-on-year increase in its 2024 net profit to Yuan4bn ($545.5m).

The company credited this growth primarily to the continued strength of the international oil shipping market in 2024, with seasonal trends weakening.

Baltic Exchange data shows that the average daily round-trip TCE for a 270,000 tonne Middle East Gulf to China (TD3C) voyage is approximately $34,896, a slight 3% decline from last year, the company said.

Rates for small and medium tankers saw a temporary rise due to detours caused by the Red Sea crisis, while product tanker rates decreased, continuing their downward trend in the second half, as some crude oil tankers shifted to product oil shipping.

Cosco Shipping Energy attributes its strong performance to its keen market insights and strategic fleet management. Its international crude oil transit business from domestic clients remained robust. Moreover, it enhanced the integration of domestic and international trade, crude oil and refined oil transportation. Additionally, the company further expanded its global reach and diversified revenue by focusing on key routes, regional capacity planning, and pipeline-supported transportation projects.

Non-recurring income, including gains from ship disposals and government subsidies, is expected to result in a net gain of Yuan10m, recovering from a net loss of Yuan750m last year.

Following the inclusion of Cosco, its parent company, in the US Department of Defense’s sanctions list, along with over 130 other Chinese companies, Cosco Shipping Energy saw a positive market reaction. The company’s share prices in both Shanghai and Hong Kong rose, a potential echo of the effects seen after US sanctions on Cosco subsidiaries in 2019.

Cosco Shipping Energy operates the world’s largest oil shipping fleet with the leading VLCC capacity, while the US sanctions on Cosco Shipping’s subsidiaries triggered a significant surge in VLCC demand and shipping rates.

Kpler’s vessel tracking shows that last year, Shandong imported about 1.7m barrels of oil per day from Iran, Russia, and Venezuela, representing 17% of China’s total imports. Should China halt the docking of sanctioned ships, compliant VLCCs will be needed to replace them, leading to an increase in VLCC demand.