Chinese firms buying South Korean, Japanese tankers amid geopolitical shifts

Chinese companies are acquiring tankers built in South Korea and Japan, which are considered strategic assets, especially as countries such as Russia face sanctions, while the US imposes fees on Chinese-built, owned and operated ships with certain exemptions, maritime industry executives said May 8.

Chinese firms have purchased at least 10 VLCCs this year in the second-hand market, six of which were constructed in South Korean shipyards and two in Japanese ones, said a shipping broker tracking these deals. There are another six VLCC deals this year with buyers whose details are unknown and could be of any origin, including China, the broker added.

One in every two or three VLCC purchases in the second-hand market is by companies based in China, said a shipyard executive at the IMDEX Asia 2025 conference and exhibition in Singapore.

"New VLCCs are very expensive and can cost close to $130 million. Chinese companies are mostly buying ships that are 18-20 years old," the executive said.

Older ships can be utilized for floating storage and ship-to-ship transfer of crude outside port limits near Tanjung Pelapas in Malaysia for delivery in China, sources said.

The latest deals involving Chinese companies range from $37 million to $47 million, the shipping broker said, adding that some are even cheaper than the price at which Chinese companies are buying modern Aframaxes of lesser age.

Around two months earlier, the 12-year-old, South Korea-built, scrubber-fitted and epoxy-coated LR2 that can also be used as an Aframax, the Raffles Harmony, was heard to have been purchased by a Chinese buyer for around $42 million, sources said. Conversely, a 20-year-old, Japan-built VLCC sold for $37.5 million, while a South Korea-built VLCC of the same age sold for $31 million, they said.

These tankers offer strategic security for oil imports as they can be controlled through subsidiaries incorporated in the Persian Gulf, providing greater flexibility amid US-imposed fees on Chinese ships calling at its ports, said a naval architect and shipping analyst who tracks movement and ownership of ships.

Aframaxes are useful in ship-to-ship transfers at the USWC, and for moving cargoes from Russia, the source added.

The trend of controlling tanker ownership on a large scale gained momentum with the onset of the Russia-Ukraine war in 2022. Entities linked to Russia but with registered offices in countries in the Persian Gulf and even India's Mumbai began purchasing tankers, giving a massive boost to the second-hand market.

In March, a Chinese buyer was heard to have purchased two Japan-built, 17-18-year-old Aframaxes, the Red Sun and the Capricorn Sun, for a combined total of over $60 million, sources said.

Crude prices are relatively low, and it is a "no-brainer that the price cap [imposed under US sanctions] is being met", but during price spikes, controlling a large fleet is advantageous for supplying Russian crude to buyers, despite stringent due diligence, a maritime insurance executive said. Such a fleet can also be used to load crude from Iran and Venezuela, he added.

China-based companies have also purchased at least three 21-22-year-old Suezmaxes this year for around $22 million-$26 million each, sources said.