China's new port fees on US-owned ships could boost global tanker freight rates, following similar US fees on Chinese vessels, raising trade disruption fears.
Global tanker freight rates, which have fallen this month, may rebound as China imposes port fees on US-owned ships, reports Ho Chi Minh's Global Tanker Freight.
The Chinese government announced fees of about $56 per net ton on US-owned ships calling at its ports, which could mean costs of over $5.9 million for VLCCs and $1.9 million for LR2s and Aframaxes. This move follows US port fees on Chinese-owned ships and has raised fears of trade disruption.
The notification defines US-owned vessels as those where American enterprises or individuals hold 25 percent or more equity, voting rights, or board seats. Analysts warned this could affect companies listed on US stock exchanges, including Scorpio, Ardmore, Teekay, and Torm, whose tankers may avoid Chinese ports until clarity emerges.
Ralph Leszczynski of Bancosta stated that the 25 percent equity rule would be difficult to quantify, as indirect ownership through investment funds could trigger fees. He suggested that the measures may eventually apply only to US-headquartered firms, which represent a small share of the global fleet.
Brokers noted that around 14 percent of the global VLCC fleet and 15 percent of Aframax-LR2s and MRs are US-owned or operated if US-listed companies are included. Chinese trade could also be affected, as the country imports naphtha and exports jet fuel, gasoline, and diesel.
The announcement came as tanker freight was easing after recent highs. VLCC daily earnings on the Persian Gulf-China route fell from over $100,000 in September to below $70,000 in October. MSI forecasted average VLCC earnings at $61,400 this quarter, nearly 50 percent higher than the previous quarter.
Analysts noted that the reference to US-operated ships adds uncertainty, as oil majors control many tankers. Platts assessed the Persian Gulf-China VLCC route 16 Worldscale points higher on October 10 at w86, while the Persian Gulf-East Africa MR route rose w8.5 to w182.5.
