Cosco Shipping Energy Transportation has foreseen brightened market prospects in the coming months.

While spot tanker rates have struggled to stay above operating expenses in recent quarters, the tanker arm of state conglomerate China Cosco Shipping pointed to rising seaborne oil trade volumes, recovering refinery runs and slowing newbuilding deliveries.

“In the second half of 2021, the expectation of gradual improvement in oil demand and the shrink of Opec+ production reduction will promote the recovery of shipping oil trade,” Shanghai and Hong Kong-listed Cosco Energy said in its interim report.

“At the same time, with the end of the maintenance season, the run rates of refineries will gradually recover…The foundation for market recovery is being established.”

The company warned of demand uncertainty during the ongoing Covid-19 pandemic but said the pressure from tonnage oversupply is easing.

“In terms of tanker supply, new ship deliveries are expected to remain low over the next two years,” Cosco Energy said.

“Also, with the trend towards a greener shipping industry, older ships tend to be withdrawn from the market to accommodate cleaner fuels and to respond to the industry’s environmental policies.”

The company, due to take delivery of the world’s first LNG-fuelled VLCC later this year, has vowed to continue its pursuit of green shipping and dispose of older tonnage.

In the report, Cosco Energy said it will have a full review of “the ship age structure and ship type distribution” and “enhance the market competitiveness of the overall fleet”.

“[We] will follow the trend of global energy green transformation, and use digital lean fleet operation management to optimise navigation speed and reduce fleet carbon emission intensity,” the company said.

Cosco Energy recorded a net profit of CNY 582m ($90m) for the first half of 2021, in line with its previous expectation. This was against the CNY 2.95bn achieved 12 months ago.

Revenue decreased by 37% to CNY 6.08bn.

“In the first half of 2021, the demand for petroleum was still suppressed by the Covid-19 epidemic,” Cosco Energy said. “The fundamentals of oversupply still make the international oil shipping market relatively depressed.”

The company declared no dividend for the period.