CITIC Securities: The future of commercial spaceflight is the vast universe; optimistic about the future performance of the commercial space sector.

(Source: 财闻)

In the long run, if the conflict continues to escalate and intensify, the global supply chain repair process may be disrupted, the central level of energy and transportation costs could remain elevated, and further increase uncertainty in global asset pricing.

On April 1, a research report from CICC Jianxin said that the future of commercial space is boundless like the stars and the sea. Both the U.S. and China place commercial space at extremely high strategic priority. SpaceX leads in areas such as constellation deployment progress, rocket launch capacity and costs, revenue scale, and valuation scale. Driven by the strategic value of frequency-and-orbit protection and the commercial value of operational services, China’s policies support the development of commercial space from both the industrial and capital-market sides. Domestic development is showing an accelerated catch-up trend; large reusable rockets are set to begin frequent first launches, which may gradually unblock key bottlenecks in the industry and speed up the commercial space sector to achieve a closed-loop.

After looking favorably on the future performance of the commercial space sector, the satellite segment will focus on payloads overall, antennas and supporting components, laser communication terminals and supporting components, and solar array wings and related energy systems. For the rocket segment, the focus will be on engines and their 3D printing, and rocket body structural components. For the ground equipment segment, the focus will be on civilian terminals and phone direct-connect related items. For operational services, the focus will be on companies with rare qualifications.

In addition, a research report from CICC Jianxin also said that the spillover effects of the Middle East conflict continue to become evident, and the logic underpinning global asset pricing is facing a repricing. On March 27, the European Federation for Transport and Environment (T&E) released a report stating that, affected by the U.S.-Israel conflict and related hostilities involving Iran, since February 28 the cumulative additional fuel costs for the global shipping industry have exceeded €4.6 billion; ship fuel prices have risen significantly. At the same time, foreign financial institutions noted that the impact of the Middle East conflict on the market has entered a new stage, and investors’ focus is shifting from the inflation shock to the suppression of global economic growth and the resilience of supply chains. In the short term, an escalation of the geopolitical situation will raise costs for crude oil and shipping logistics, increase global market volatility and demand for hedging, benefiting crude oil, shipping, and certain inflation-hedging assets, while also creating disturbances for global equity risk assets. In the long run, if the conflict continues to escalate and intensify, the global supply chain repair process may be disrupted, the central level of energy and transportation costs could remain elevated, and further increase uncertainty in global asset pricing.

On the supply side, long-term tightening or a permanent lift may push up the VLCC freight rate “center of gravity.” A shift in the supply-side pattern may also rewrite the industry’s underlying investment logic for tankers. For years, a lack of capital expenditure in the old-economy sector has laid the foundation for the long-term upward shift in the freight-rate central tendency. After the industry cycle topped in 2008, global shipbuilding capacity was largely cleared; current capacity is only about 60% of the 2011 peak. Shipyards in Japan and South Korea are mired in severe labor shortages. In China, new large tanker capacity will not be released until the fastest in 2029 to 2030. In the global VLCC fleet, the proportion of vessels with more than 15 years of age is as high as 41%, and they are about to enter the retirement cycle. Meanwhile, new ship orders in 2026–2029 are only sufficient to fill about 22% of replacement demand, highlighting a gap in capacity. In addition, non-standard “shadow fleets” with more than 20 years of age are unable to return to compliant markets, and persistent capacity shortages may lift the bottom “center of gravity” of tanker freight rates.

Geopolitical disruptions are reshaping shipping routes and widening supply-demand gaps. Persistent geopolitical disruptions in the Middle East amplify the fragility of supply on the tanker transportation side, while also reshaping the global energy maritime shipping landscape, further widening the industry’s supply-demand gap. Passage through the Strait of Hormuz is impeded, causing nearly 10% of the VLCC fleet and 4.5% of Suezmax-type vessels to be trapped; another 10% of capacity is on standby, awaiting clearance or being stranded. Core effective capacity is significantly lost. The disruption to oil supply from the Middle East forces Asian buyers to switch to purchasing from the Atlantic basin; short-haul routes shifting to long-haul routes doubles cargo fleet utilization, and much idle capacity is taken up by demand for longer-distance hauling. Combined with Asian countries’ efforts to fill shortfalls in energy security, the accelerated expansion of crude oil strategic reserves provides long-term support for rising incremental demand for oil shipping.

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