Trucks are loaded with shipping containers at a port in Qingdao in China's Shandong province. Picture: REUTERS
Trucks are loaded with shipping containers at a port in Qingdao in China's Shandong province. Picture: REUTERS

Beijing/Singapore — China plans to ask the US to lift sanctions on its biggest shipping company at high-level trade negotiations in Washington this week, people familiar with the matter said.

Officials plan to raise the issue of penalties against the Dalian units of China Cosco Shipping, which the US accuses of knowingly violating restrictions on carrying Iranian petroleum, said the people, who asked not to be identified discussing a private matter. Four other Chinese entities were also sanctioned last month along with Cosco. The people did not say if the Chinese delegation planned to seek relief for those companies.

The US decision to impose sanctions on Chinese shipowners including Cosco Shipping Energy Transportation prompted a bidding war as charterers scrambled to replace vessels owned by targeted companies. It sent costs for ships with oil-carrying capacities ranging from 650,000 to 2-million barrels to a 2019-high, while supertanker day rates for the Middle East-China route surged to the highest level in probably 11 years.

The penalties against the Chinese companies bar US citizens and entities from dealing with the firms, effectively blocking them from American banks at the heart of the global financial system.

China’s National Development and Reform Commission and ministry of commerce didn’t immediately respond to faxes seeking comment on the request. China Cosco Shipping did not respond to an e-mail and fax.

Top negotiators from both sides are scheduled to meet on Thursday and Friday for the first face-to-face talks between senior officials since July. A Chinese official said earlier the country was open to reaching a partial deal. People familiar said separately the US is seeking to include a previously agreed currency pact in any agreement reached.

While the sanctions specifically targeted Cosco’s Dalian subsidiary, charterers indiscriminately shunned all tankers owned by its parent company and other units for fear of running afoul of the rules. This week, however, some oil traders again started booking tankers operated by Cosco, though the charters are not expected to immediately bring calm to markets.