Tanker operator Concordia Maritime of Sweden is bullish about the product tanker market in 2019.
Referring to the increase in VLCC revenues the group’s latest earnings release, it stated “Correlation between vessel types is high, and when VLCCs started to move, the other crude oil segments followed suit.”
It stated that with more oil in circulation, there will be a knock-on effect in the product tanker market in 2019. “The upturn in the product tanker market is also taking place from low levels, but it is still a clear upturn. For example, the rates for combination voyages in the Atlantic have risen from US$7,000 per day to US$15,000 (in Q4) in a short period.”
The group also expects the impending IMO 2020 global sulphur cap will have an impact on tonne-mile demand, the phasing out of less compliant tankers and arbitrage opportunities.
Concordia Maritime chief executive Kim Ullman told analysts on a recent earnings call that the company has prepared an arbitrage strategy by hedging against the expected higher cost of low sulphur fuel in 2020. The company is said to have half its fuel consumption hedged for the 18 months commencing 1 January 2020, which it believes will be the high point of the price difference between low and high sulphur fuel.
The company stated it has no intention of investing in scrubbers.
The Asian Tanker Conference in Singapore 26-27 February 2019 will discuss evolving regulation, optimising operations and future commercial expectations.