Guotai Haitong: Maintains Overweight Rating on Oil Shipping; 2026 to See a Wave of Tanker Orders Driving Sustained Shipbuilding Boom

Guotai Haitong released a research report stating that tight shipyard capacity in the coming years will provide a supply bottleneck, and maintains an Overweight rating on oil shipping. Before the Middle East conflict, oil shipping had already entered a super bull market. During the conflict, war risk premiums, regional disruptions, and efficiency losses drove freight rates to new highs. In the medium term, the Strait is expected to recover, oil shipping supply and demand will return to high levels, and restocking along with Changjin's control of the market will further add to the momentum, with high profitability expected over the next two years. Meanwhile, geopolitics provides an option for unexpected upside in demand, and tight shipyard capacity provides a supply bottleneck. The bank believes the sustainability of the oil shipping boom could exceed expectations. Over the past five years, the shipping boom has progressed in relay fashion with orders placed sequentially, driving a sustained shipbuilding boom. It is expected that capacity constraints in this shipbuilding cycle will be better than the previous one, and 2026 will see a wave of VLCC orders, continuing to ensure the sustainability of the shipbuilding boom. Guotai Haitong's main points are as follows: Over the past five years, the shipping boom has progressed in relay fashion with orders placed sequentially, driving a sustained shipbuilding boom. Over the past several decades, the shipping boom has twice driven shipbuilding cycles. In the first round, China's WTO accession in 2002 led to economic rise and the start of urbanization, driving sustained strong shipping demand and a synchronized upswing across dry bulk/container/oil shipping. Shipowners' consensus expectation of sustained prosperity kicked off an order wave from 2006, driving the shipbuilding boom upward. From 2009 to 2019, the shipping boom fell rapidly and remained sluggish for a prolonged period, while shipbuilding capacity peaked two years later and underwent capacity clearance and industry consolidation, leaving a deep and far-reaching impression on the industry. In the second round, over the past five years, shipping sub-sectors have seen booms progressing in relay fashion, with large-scale orders for container ships/LNG carriers/ro-ro vessels/product tankers/crude tankers. The increase in shipyard order coverage has supported the shipbuilding boom. Compared with the previous cycle, it is expected that capacity constraints in this shipbuilding cycle will be better than the previous one, and this upcycle will be more stable and the boom more sustainable. Shipyard order coverage: has remained at high levels since 2026, with new orders already scheduled through 2030. Over the past five years, the scale of shipyards' order backlogs has grown rapidly, while shipbuilding capacity expansion has been relatively slow and restrained. Shipyard order coverage (order backlog/trailing twelve-month new ship deliveries) has continued to rise, exceeding 4 years for global shipyards in mid-2024 and 5 years for Chinese shipyards in mid-2025, remaining at high levels in 2026, with new orders currently scheduled through 2030. Rising shipyard order coverage supports the shipbuilding upcycle. The newbuilding price index has risen continuously since 2021, approaching the previous cycle's peak (August 2008) in 2024Q3, and has basically remained at high levels in 2025-26. Newbuilding prices by vessel type may reflect differences in shipowners' ordering willingness: large container ships of 10,000+ TEU were the first to exceed the previous peak and remain significantly above the previous peak in 2026; product tanker MR prices are basically flat versus the previous peak; crude tanker VLCC prices have been stable with a slight upward trend over the past year; dry bulk vessel prices remain below the previous peak. New ship orders: 2026 will see a VLCC ordering wave, continuing to ensure the sustainability of the shipbuilding boom. Considering the replacement of aging vessels and environmental regulatory requirements, large-scale new ship orders are still expected in the coming years. Based on long-term industry observation, investment return expectations are key to shipowners placing orders. For container shipping companies, ship upsizing has sustained their willingness to order. Oil tanker/dry bulk shipowners generally evaluate based on single-vessel return models, with freight rate expectations being core. In mid-2026, the share of order backlog in the shipping industry further rose to 21.7%, with container ships, crude tankers, product tankers, and dry bulk vessels at 39.8%, 27.6%, 20.3%, and 14.2%, respectively. Since 2026, crude tankers have seen an ordering wave, with 168 new VLCC orders, mainly placed first by European shipowners. Currently, there are 930 VLCCs globally, of which 169 are sanctioned, and 21% are vessels aged 20 years or older. Considering that over the next five years, another 26% of VLCCs will exceed 20 years of age, new ship deliveries will only ensure that compliant capacity supply in mainstream markets remains basically stable. Since 2026, geopolitical conflicts have driven oil shipping to new highs, and VLCC five-year time charter rates exceed $50,000/day. If oil shipping and dry bulk shipowners reach a consensus optimistic expectation for sustained prosperity in the future, traditional shipowners may continue to place large-scale orders. Tight shipyard capacity in the coming years will provide a supply bottleneck, and the Overweight rating on oil shipping is maintained. Before the Middle East conflict, oil shipping had already entered a super bull market. During the conflict, war risk premiums, regional disruptions, and efficiency losses drove freight rates to new highs. In the medium term, the Strait is expected to recover, oil shipping supply and demand will return to high levels, and restocking along with Changjin's control of the market will further add to the momentum, with high profitability expected over the next two years. Meanwhile, geopolitics provides an option for unexpected upside in demand, and tight shipyard capacity provides a supply bottleneck. The bank believes the sustainability of the oil shipping boom could exceed expectations. Risk warnings: geopolitical conflicts, economy, industry regulation, environmental policy implementation falling short of expectations, etc.