China has launched an aggressive tanker-building campaign and is now one
of the world’s leading tanker builders. Indeed, Chinese shipyards have captured
30 percent of global orders for VLCC construction. Tankers form a major por-
tion of Chinese yards’ output and will continue to do so, as shown in Figure 6.3.
The figures bear witness to the success of Chinese firms. Of the 21 million
DWT of Suezmaxes and VLCCs currently on order and under construction in
Chinese yards, roughly 13 million DWT are being built for foreign operators.
Although China lags behind the very advanced Japanese and Korean yards
technologically, the large number of foreign tanker orders seems to be a resound-
ing vote in favor of the Chinese shipbuilding industry’s increasing quality.
Table 6.2 summarizes Chinese shipbuilders’ relative strengths and weaknesses.
Broader Effect on the Tanker Market?
Some observers worry that China’s aggressive tanker-building program could
outstrip demand, driving tanker rates down. Chinese analysts suggest acquiring
secondhand tankers as a way of avoiding this problem. Strong global oil demand
growth and increasing reliance on long-haul African and Middle Eastern oil
supplies will help prop up the market for some time to come. Long-haul product
exports from the Middle East will also create incremental VLCC demand in the
coming years.
In addition, if Chinese builders can capture a share of the tanker market at a
rate exceeding the overall growth indemand, this will lower the risk of
An Oil Armada? 117Figure 6.2 Tanker Fleet Size vs. Oil Dependency.
Source:Lloyd’s Sea-Web, BBC.
Note:Figures based on ownership by group owners, registered owners, operators, ship managers, and
DOC holders.