Capital Product’s Bigger Fleet Brings Higher Revenues

Capital Product Partners L.P., a tanker, container and drybulk vessel operator, has recorded USD 48.2 million in revenues in the third quarter, an increase of USD 5.5 million compared to the same period in 2013, which is attributed to the increased fleet size. The net income for the third quarter was USD 11.3 million. 

As of September 30, 2014, the company’s capital amounted to USD 886.6 million, which is USD 105.2 million higher than the capital as of December 31, 2013. Capital’s’total debt has decreased by USD 4.0 million to USD579.3 million.

Capital says that product tanker spot earnings modestly improved in the third quarter of 2014 compared to the previous quarter, but remained overall at fairly soft levels, as lack of arbitrage opportunities in the Atlantic kept rates under pressure for most of the quarter. However the U.S. Gulf and Atlantic product tanker spot market experienced a marked improvement on the back of increased activity towards the end of the quarter and into the fourth quarter of 2014. The market’s performance in the Eastern Hemisphere was more positive throughout the quarter, as rates experienced some notable gains on the back of strong Asia naphtha demand, while the addition of new refinery capacity in Saudi Arabia has resulted in increased petroleum product exports from the Arabian Gulf.

The product tanker period market remained active during the third quarter of 2014, but rates declined due to the weaker spot market, according to the company.

On the supply side, the ordering activity for medium range (MR) tankers slowed significantly year-to-date 2014, as most quality shipyards have now exhausted their capacity through 2016. Analysts expect that net fleet growth for product tankers for 2014 will be in the region of 3.9%, while overall demand for product tankers for the year is estimated to grow at 3.8%.

The Suezmax spot market improved considerably in the third quarter of 2014, as average earnings more than doubled year-on-year from 2013. Strong gains were registered in the first half of the third quarter of 2014 on the back of increased European and Chinese demand, and due to supply concerns in the Arabian Gulf. As the third quarter progressed, activity and rates gradually retreated as a result of slower Chinese crude imports and seasonally lower demand out of Europe, as European refineries approached the autumn maintenance season.

As a result of the improving spot market compared to a year ago, the Suezmax period market saw more activity and at increased rates, when compared to the same quarter last year.

On the supply side, the Suezmax orderbook is among the lowest in the industry, corresponding to 11.5% of the current fleet. Suezmax tanker demand is expected to continue growing in 2014, driven by increased crude oil shipments from the Atlantic basin to the Far East and Europe. Overall, industry analysts forecast that Suezmax vessel demand will grow by approximately 2.4% in the full year 2014, with net fleet growth projected at 0.3%.

Press Release