Norway: Slightly Better Chemical Tanker Market for Odfjell in Q1 2013
Odfjell, a Norwegian company engaged in transportation and storage of bulk liquid chemicals, acids, edible oils and other special products, reported an EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) of USD 27 million in its report for the first quarter of 2013.
Based on the report, EBITDA reflects a slightly better chemical tanker market and higher terminal earnings. The average freight rate per tonne shipped for 1Q13 remained more or less unchanged from the previous quarter. Time charter results up 8% compared to last quarter.
The chemical tanker market improved slightly the first quarter of 2013, but remains at loss-making levels. Steady CoA nominations combined with increased spot activities enabled the company to employ ships more efficiently. The bunker prices were marginally higher than in the previous quarter.
After many years of co-operation, Odfjell Tankers (Odfjell) and National Chemical Carriers (NCC) agreed, effective 1 June 2013, to disc ontinue the joint pool of 40,000 to 45,000 dwt coated chemical tankers, because of different strategies going forward. The economic impact 3 for Odfjell will be limited.
As the majority of the NCC vessels are traded in the spot market, Odfjell’s contract coverage ratio will increase as a result of the termination. The partnership between NCC and Odfjell will continue with two 75,000 dwt vessels currently under construction.
With respect to fleet changes, in March Odfjell took delivery of the third and final newbuilding from China, Bow Nangang, a 9,000 dwt stainless steel chemical tanker. The delivery of the new 75,000 dwt coated chemical tanker from the Daewoo Yard in Korea has been delayed to late May or early June.
The company’s newbuilding programme for four 46,000 dwt coated chemical tankers at Hyundai Mipo Yard in Korea for delivery between January and July 2014 is on track. The redelivery of the 13 NCC vessels in the NOCT pool will start immediately following the termination date and will be completed within one to two months when the vessels have ended their current trading programmes.
The first quarter at Odfjell’s terminals delivered improved EBITDA compared to the previous quarter. The re-commissioning project at Odfjell Terminals (Rotterdam) is running slightly behind schedule, primarily due to a shortage of engineering capacity. Final agreements have been entered into with Lindsay Goldberg post quarter to expand existing partnership to include substantially all tank terminal assets.
The supply/demand balance for Odfjell’s chemical tankers continues to develop favourably, as there is virtually no ordering of advanced parcel tankers. However, high bunker cost and increased congestions and delays in port are serious concerns, both negatively impacting the overall results and performance.
Odfjell, May 7, 2013