Four vessels! The wave of VLCC orders continues—Chinese shipbuilders secure another major contract.

Global commodity trading giant Mercuria Energy Group continues to expand its fleet and plans to order a VLCC from a shipyard in Dalian.

According to TradeWinds, Mercuria is finalizing a 2+2 shipbuilding contract with Dalian Shipbuilding for the construction of three 307,000-dwt VLCCs. The new vessels are expected to be delivered in 2029, with each vessel priced at US$123 million. The total contract value is approximately US$492 million (about RMB 3.414 billion).

For reference, Clarkson’s data show that the current price of a newbuild conventional-fuel VLCC with a deadweight tonnage of 315,000 to 320,000 tons is approximately US$128 million, unchanged from the same period last year.

This is Mercuria’s second order for a VLCC. According to available information, the company currently does not operate any VLCCs; it has only one new vessel ordered from Waigaoqiao Shipbuilding in 2024. In addition, another VLCC will be ordered from Waigaoqiao Shipbuilding through China Shipbuilding & Offshore International Co., Ltd.’s subsidiary, China Shipbuilding & Offshore Brokerage Co., Ltd. (CSCC). These two vessels are expected to be delivered between early 2027 and early 2028.

Mercuria is one of the world’s largest energy and commodity trading companies, founded in 2004 by Marco Dunand and Daniel Jaeggi, former commodities traders at Goldman Sachs. In recent years, Mercuria has been actively involved in the newbuilding ship market, placing orders for new vessels with several Chinese shipbuilders. Just last month, the company placed orders for two plus two Newcastlemax bulk carriers, each with a deadweight tonnage of 211,000 tons, as well as two LR2 product tankers, each with a deadweight tonnage of 115,000 tons. The bulk carrier orders were awarded to Nantong Xiangyu Hai Zhuang, while the tanker orders were secured by Dalian Shipbuilding.

According to Clarkson’s data, Mercuria currently has nine new ships under construction, including one VLCC built by Waigaoqiao Shipbuilding, two LR1 product oil tankers built by Yangzijiang Shipbuilding, two 41,000-dwt chemical tankers built by Jinling Shipyard of China Merchants Shipbuilding, two bulk carriers built by Xiangyu Haizhuang, and two LR2 vessels built by Dalian Shipbuilding Industry Company.

Thanks to strong charter rates and an aging fleet, the newbuilding market for VLCCs has been quite active this year. According to Clarkson’s data, global orders for new VLCCs reached as many as 16 vessels in January alone. Recently, reports indicated that Mediterranean Shipping Company is in talks with Hengli Heavy Industry for up to 10 VLCC orders, while Greek shipowner Dynacom Tankers Management plans to place an order for 12 VLCCs with Hudong-Zhonghua Shipbuilding in Shanghai.

The surge in new VLCC orders is driven by a combination of factors. From the supply side, the market is awash with aging shipping capacity—approximately 20% of VLCCs are now over 20 years old. Due to the uncertainty brought about by geopolitical shifts, these older vessels may well be repurposed as floating storage units.

Moreover, the VLCC market has shown a clear rebound in prosperity. Over the past year, daily charter rates for VLCCs have surged significantly, and suitable, seaworthy vessels on the secondhand ship market have become increasingly scarce. According to data provided by shipbroker Banchero Costa, secondhand VLCC prices have continued to climb, reaching historic highs. A VLCC aged five years now fetches nearly $120 million—a price that is only about 6% lower than the newbuilding price quoted by Clarkson ($128 million). Driven jointly by cost-effectiveness and expectations of long-term returns, shipowners are accelerating their efforts to secure newbuilding capacity.

Excluding the latest orders, Clarkson’s data show that Dalian Shipbuilding Industry Group currently holds a total of 171 ship orders totaling 29.01 million deadweight tons. This includes 1 floating production storage and offloading vessel (FPSO) from Dalian Shipbuilding, 54 oil tankers, 15 LNG carriers with a capacity of 175,000 cubic meters, and 3 deck cargo vessels—altogether 73 ships with a combined deadweight tonnage of 12.77 million tons. Shan Chuan Heavy Industry has 32 oil tankers, 7 container ships, and 3 bulk carriers—a total of 42 ships amounting to 4.49 million deadweight tons. Additionally, Dachuan Tianjin has 22 oil tankers, 20 container ships, and 14 bulk carriers—a total of 56 ships with a combined deadweight tonnage of 11.75 million tons. Delivery schedules for these vessels extend as far as 2030.