Euronav Expects Strong Tanker Market in Q3
Sustained improvement in tanker freight rates has driven Euronav’s EBITDA up to USD 142.3 million in the second quarter of 2015 ended June 30, the tanker owner and operator said in its preliminary financial results.
Freight rates throughout the three months to the end of June were consistently strong in both the VLCC and Suezmax categories.
For the second quarter 2015, the company had a net result of USD 92.4 million against a USD 22.6 million loss in the second quarter of 2014.
The company has acquired four existing Very Large Crude Carriers (VLCCs) under construction at Hyundai Heavy Industries with option for four more sister vessels for an aggregate purchase price of USD 384 million.
“Euronav has made further progress during Q2 by securing four modern VLCCs with the option for four more – at a very competitive price. This fleet rejuvenation was supported by a strong and stable rate environment during the second quarter which has continued into the current quarter. Improving demand for and increased supply of crude oil, rising sea-miles to serve that demand in the Far East and a manageable outlook for vessel supply all provide a supportive market structure. Management look forward with confidence,” said Paddy Rodgers, CEO of Euronav.
“The orderbook of tanker vessels has increased during Q2 2015 with further orders at the shipyards but this order flow has remained modest by historical standards – especially given the positive freight rate background. The impact on the global fleet in both VLCC and Suezmax will not be seen until the second half of 2016. Euronav remains of the view that the current schedule of vessel supply is manageable given the robust fundamentals of the tanker sector but as it has been the case in the past, additional orders may result in overcapacity and lead to destruction of the market. The supply of crude oil is continuing to be driven higher with record output witnessed during Q2 in a number of key territories most notably Saudi Arabia, Iraq and Russia,” Euronav commented.
However, the company said that port congestion was an important topic as it was taking capacity out of the market and is being driven by excess supply of crude unable to find storage on shore.
As informed, the third quarter of the year had a robust start for tankers with freight rates for VLCC so far above USD 60,000/day resulting in fixing of more than 50% of available days in Euronav’s tanker fleet.
In terms of outlook, Euronav said that industry fundamentals remain healthy with limited vessel supply, growing demand stimulated by a lower oil price, increased supply of oil from record production and the continuing theme of ton mile expansion of Atlantic Basin Oil heading East.
“Euronav’s Suezmax fleet trading on the spot market have earned on average USD 42,750 per day (TCE) and 50% of the available spot days have been fixed. Euronav is well positioned to continue to benefit from these positive sector trends well into 2016, is conservatively leveraged, has a strong focus on maximizing returns for shareholders in the form of dividends and is disciplined in terms of future growth opportunities,” the company concluded.