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Yangzijiang Cancels $180m MR Tanker Order Over Sanctions Risk
China’s largest private shipbuilder Yangzijiang Shipbuilding has cancelled four MR tanker newbuilding contracts worth around $180 million, citing newly uncovered links between the buyer’s shareholder and alleged efforts to circumvent U.S. sanctions. The cancellation comes at a time when global sea freight markets are closely watching compliance risks in tanker construction and operations.
Details of the Cancellation
In a filing to the Singapore Exchange, Yangzijiang reported that three of its subsidiaries—Jiangsu Yangzijiang Shipbuilding, Jiangsu New Yangzi Shipbuilding, and Jiangsu Yangzi Xinfu—terminated the contracts, which covered four 50,000 dwt MR tankers scheduled for delivery in 2026–2027.
The decision followed “critical information just disclosed by the buyer,” which legal counsel concluded constituted a breach of contract or “supervening illegality” tied to the buyer’s payment obligations.
Financial Impact and Sea Freight Relevance
Yangzijiang confirmed it has received $22.5 million in deposits—around 15% of the contract value—including instalments on one ship where construction had already begun. The company emphasized that no revenue or profit had been booked to date and that the cancellations will have no material impact on 2025 earnings, while reserving all legal rights against the buyer.
Industry analysts noted that the cancellation removes four modern MR tankers from the future orderbook—vessels that would have directly served the global sea freight and chemical/product tanker trades. Such moves can tighten supply in the medium-range segment, impacting freight rates and deployment strategies for cargoes such as refined products, chemicals, and base oils.
Broader Compliance Risks
The episode highlights the heightened compliance challenges facing Asian shipyards as sanctions enforcement intensifies against shipping networks tied to Russia, Iran, and other restricted regimes. Legal scrutiny over financing and cargo flows is increasingly shaping investment decisions across the international sea freight industry, from shipyards to tanker operators.
Despite these cancellations, Yangzijiang retains a record orderbook spanning bulk carriers, containerships, gas carriers, and tankers, reinforcing its position as one of China’s premier newbuilding yards and a key supplier of vessels supporting global sea freight and energy transport.
