China Merchants Energy Shipping (CMES) has posted stronger first-half results on higher tanker rates but warned of an uncertain near-term outlook due to the ongoing US-China trade war.
The Shanghai-listed subsidiary of state conglomerate China Merchants Group recorded a 50% year-on-year gain in net profits to CNY 474m ($66.2m) in January-June, while revenues increased by 38.1% to CNY 6.38bn.
“VLCC markets were better year-on-year as our oil tanker fleet was growing. We were taking deliveries of newbuilding very large ore carriers (valemaxes) so our bulker earnings were supported,” CMES said in its quarterly report.
“Investment gains were growing as some LNG carriers we jointly own with other companies are entering operation.”
However, the company expressed worries over the escalation of the US-China trade war with Beijing set to impose a 5% tariff on US crude imports from September.
“China has put crude on its tariff list against US imports for the first time. As Taiwan and South Korean have limited capacity to import US crude, the trade war issues are expected to curb the growth of US crude exports,” said CMES.
“Geopolitical risks continue to affect crude output and shipping demand.”
The company suggested that the IMO 2020 and slowing newbuilding deliveries would offer support to tanker markets, but that limited scrapping could lead to oversupply.
“We are optimistic over the medium-term outlook for oil shipping markets, but there are still many challenges in the second half of 2019. We do not wish to be overly positive for the peak demand season in the fourth quarter due to various market uncertainties,” CMES said.
During January-June, the company shipped nearly 36m tonnes of oil, 32.5m tonnes of dry bulk cargoes, 11.7m tonnes of LNG, and 7.84 tonnes of ro-ro cargoes.
As of 30 June, the company operated 215 oil tankers, LNG carriers, bulkers, car carriers and ro-ro ships in operation and on order. It owns the world’s largest VLCC and valemax fleets.
