U.S.-Sanctioned Cosco Unit Gets Two-Month Wind-Down Period

By Stephen Cunningham

Companies still doing business with a U.S.-sanctioned unit of China’s biggest shipping company have less than 60 days to wind down their transactions.

The temporary reprieve comes after last month’s surprise announcement of sanctions against the Dalian units of China COSCO Shipping Corp. caused freight rates to skyrocket as traders canceled charters linked to the parent company.

The U.S. on Thursday issued a license permitting activities deemed necessary to the “maintenance or wind down of transactions” with one of the units, Shipping Tanker (Dalian) Co., until Dec. 20, according to a statement.

Tanker stocks DHT Holdings Inc, Nordic American Tankers Ltd., Frontline Ltd. and Teekay Corp. fell following the announcement.

The Treasury Department sanctioned the Dalian units in September for allegedly hauling Iranian crude. Four other Chinese entities were also sanctioned at the same time. The penalties bar U.S. citizens and companies from dealing with the firms, effectively blocking them from American banks at the heart of the global financial system.

Tanker rates soared after the sanctions as shippers scrambled to find replacement ships, depressing refining margins and affecting normal crude flows around the world.

The sanctions also created uncertainty among among shippers on whether cargoes that had already been loaded onto the vessels of sanctioned firms could be delivered or not.

Photo: Fleetmon