Concordia Maritime: Weak Tanker Market Will See an Upturn

As the tanker market remained week during the second quarter of 2018, Swedish tanker owner Concordia Maritime widened its net loss.

The shipping company suffered a net loss of SEK 57 million (USD 6.2 million) in Q2 2018, compared to a net loss of SEK 43.9 million posted in the corresponding period a year earlier.

Net loss for the six months ended June 30, 2018, stood at SEK 95.7 million, compared to a net loss of SEK 85.1 million reported in the first half of 2017.

As explained, the continuing weak market meant low earnings for vessels on the spot market, which generated a negative EBITDA. Concordia Maritime delivered a negative EBITDA of SEK 9.3 million in Q2 2018, against an EBITDA of 10 million seen in the same period of 2017.

According to Concordia Maritime, the reasons for the weak market are twofold — the combination of OPEC’s reduced production and stock withdrawals in the consuming countries has resulted in a reduced transport demand for both crude oil and product tankers. In addition, there have been extensive ship deliveries and overall this has resulted in low freight rates – for the shipping company and the rest of the sector.

“The tanker market is both cyclical and volatile in nature. From a historical perspective, we can see that high peaks are followed by deep troughs and vice versa – and the fluctuations often come fast. This presents both opportunities and challenges,” Kim Ullman, CEO of Concordia Maritime, commented.

“It is important to have a strategy that enables us to quickly adapt based on each given situation. To grasp the opportunities and deal with the troughs, we are working actively with our fleet. When times are good, it is about optimising opportunities, when they are harder, it is about ensuring employment – and creating the right starting position for when the market turnaround comes,” Ullman added.

“The combination of increased demand for tanker transport and moderate fleet growth means that we maintain our belief in a progressively stronger market at the end of the year. We also position our fleet on the basis of this scenario. The majority of our vessels are on the open spot market and are fully ready to start transporting freight when the turnaround comes,” he continued.

During the quarter, Concordia Maritime decided to participate in charters of three Suezmax vessels with Stena Bulk. Another Suezmax vessel was chartered in after the end of the quarter. What is more, Concordia Maritime secured employment for the P-MAX tanker Stena Paris for a further year.

With these charters, the company aims to strengthen its presence in the crude oil tanker segment and continue to increase its earning capacity.