On a day when sanctions uncertainty appeared to help weigh down shipping stocks, the US added names to its blacklist instead of removing them.
Thursday, there was talk in the tanker market that the US had removed sanctions on the Cosco Shipping Energy Transportation subsidiaries cited in September for alleged dealings with Iran.
Such a move would add significantly more tankers to the global fleet, likely sending tanker rates plummeting — but such a move never came to pass.
"[One of the sanctioned companies] Cosco Dalian owns 24 VLCCs which is about 3% of the VLCC market," wrote Clarksons analyst Frode Morkedal.
"Based on satellite tracking we see that 20 of these vessels are still at anchor. If the sanctions are lifted, we estimate the negative rate impact to be approx. $15-20,000/day from today's fleet utilization levels."
That fear drove several tanker stocks down in late trading Thursday, with John Fredriksen's Frontline sliding 4.42%, or $0.65, to $11.35, Teekay Tankers falling $3.73%, or $0.78, to $20.25 and DHT 2.51%, or $0.17, lower to $7.01.
Instead, the US sanctioned six more companies for allegedly funnelling millions to the National Iranian Oil Company, which the country said funds the Islamic Revolutionary Guard Corps Qods Force, which conducts unconventional warfare, often abroad.
Of the six, five — Jiaxiang Industry Hong Kong, Peakview Industry, Sage Energy, Shandong Qiwangwa Petrochemical and Triliance Petrochemical — have a presence in either Hong Kong or Shanghai. The last, Beneathco is based in the United Arab Emirates.
Sanctions send rates skyward
When the Cosco subsidiaries were sanctioned, the US was locked in a trade war with China while continuing to wage its "maximum pressure" campaign against Iran.
Tensions between the US and Iran remain high after the killing of Iranian General Qassam Soleimani earlier this month and a retaliatory missile attack on Iraqi bases housing US troops in retaliation, but the trade war has eased with the US signing a "phase one" trade agreement with China.
In a note last week, shipping data outfit Alphatanker said China could push the US to de-list the Cosco companies in the phase two talks, which officials have said will start in the near-term.
Alphatanker said the sanctions could be removed "at the drop of a hat".
Thursday, Clarksons reported scrubber-less VLCCs were earing $65,800 per day on the spot market, down from $69,500 per day Wednesday. Scrubber-fitted VLCCs fell, too, from $89,300 per day to $85,100 per day.
The rest of shipping hit, too
Tanker shares were not the only ones to fall.
Greek boxship owner Costamare fell the most on a percentage basis, 4.42%, or $0.64, to $7.89. Diversified owner Seacor Holdings fell 3.145, or $1.29, to $29.81. Bulker owner Starbulk fell 3.33%, or $0.32, to $9.44.
On Twitter, Cleaves analyst Joakim Hannisdahl attributed the drop to coronavirus sweeping through China, "lifting of sanctions on Chinese shipping and seasonal weakness in earnings."
