Quarterly earnings posted by tanker owner Odfjell SE suggest a strengthening chemical tanker market in 2022
Odfjell released its Q1 2022 results last week. Time charter earnings stood at US$136M, a figure unchanged from Q4 2021 despite fewer ship days. Net result for the quarter was US$11M with a contribution from Odfjell Terminals of US$3M.
EBIT for the period was US$27M compared with US$35M in Q4 2021. COA rate renewals were up 7% on average during the quarter.
Odfjell said, “Chemical tanker rates improved across all regions towards the end of the quarter. Negative fleet growth and improved demand growth continued through the quarter. This was further accentuated by Russia’s invasion of Ukraine leading to increased miles as European importers began sourcing substitute cargoes from further afield. The latter was also positively affecting the clean petroleum product markets, leading to reduced pressure from swing tonnage. Speed reductions due to the high fuel price have also tightened the supply and demand balance.”
The strong marker led to an allocation of US$55M of free cash flow towards debt repayments.
Odfjell’s outgoing chief executive Kristian Mørch commented, “We are pleased with our Q1 2022 results, which reflects the competitive strength of our platform even in unpredictable times. The chemical tanker market improved considerably in the second half of the quarter, driven by strong fundamentals and also by the crisis caused by Russia’s invasion of Ukraine. The chemical tanker market has tightened further and we expect to report stronger results in the second quarter.”
Harald Fotland has now taken over from Mr Mørch as Odfjell’s new chief executive.
Stena subsidiary Condordia Maritime sold tow P-MAX vessels, Stena Perros and Stena President, during Q1 2022, bringing its product tanker fleet to eight 65,200 dwt P-MAX vessels. A five-year charter contract was signed with Stena Bulk in Q3 2021 and all vessels were employed under the contract at the end of Q4 2022.
The Swedish owner also noted the upswing in the tanker market but said rising market rates are not uniform. Increasing fuel prices have led to significant differences in earnings between different segments and vessel types.
At the beginning of 2022, MR tanker earnings stood at US$8,000 but rose to US$19,000 per day by 1 April. The Suezmax market began the year at close to US$5,000 per day, rising to just over US$45,000 per day by the beginning of April according to data from Clarksons.
Concordia’s revenue declined to Skr124M (US$12M) compared with Skr180M (US$18M) in the corresponding quarter for 2021.
The company’s P-MAX ships earned US$15,500 per day during the quarter against US$9,700 per day on the market.
Stena Supreme, the sole Suezmax in the Concordia fleet remained employed in Q1, earning US$14,600 per day compared with the average market earning of US$16,700 in the period. Concordia Maritime is preparing to sell the vessel amidst a backdrop of rising asset values. Stena Supreme is valued at US$38M by VesselsValue.
The company remains cautiously optimistic for the near future. Concordia Maritime chief executive Erik Lewenhaupt said, “Stock levels remain low and the predicted net growth in the product tanker fleet is also low. We therefore expect high volatility in 2022. For 2023–2024, we anticipate a generally stronger market, although in the face of considerable uncertainty.”
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