Teekay Tankers Sees Signs of Market Upturn in 2017
- Business & Finance
2017 will present some headwinds to crude tanker rates due to cuts to OPEC production, rising oil prices, and fleet growth, however, this dip in the current market cycle will be relatively short and shallow according to Teekay Tankers, part of the Teekay Corporation.
In addition, lower fleet growth, strong oil demand growth, particularly in Asia, and a potential increase in long-haul movements from the Atlantic basin to the Pacific basin is expected to provide support towards the next market upturn, according to Teekay.
“We expect that the effect of OPEC cuts on Teekay Tankers will be mitigated, as OPEC oil is primarily transported on larger tankers and cuts in OPEC production are expected to be partially offset by increased non-OPEC production from the Atlantic region, which is typically transported by mid-sized tankers. In addition, while we do expect 2017 will be a challenging year overall for the tanker market, with approximately 40 percent of our fleet booked on fixed-rate time-charters and strong support from our lightering and other fee-based businesses, we believe Teekay Tankers has a strong base of cash flow to help reduce the effect of future tanker market volatility,” Kevin Mackay, Teekay Tankers’ President and Chief Executive Officer, said.
Tekay offered its take of what is in store for the tanker market in 2017 in its financial report for the Fiscal Year 2016.
The company ended the FY 2016 with a net profit of USD 62.86 million, a 65% drop compared to 179.64 million net profit reported for the FY 2015, despite a rise in the revenues.
Total revenues in the FY 2016 stood at USD 526.9 million, as compared to USD 514.2 million in revenues recorded in the FY 2015.
”Tanker rates continued to be seasonally strong early in the first quarter of 2017; however, rates have recently begun to soften due to several factors, including, among others, regional refinery maintenance, an increasing number of newbuilding tanker deliveries and the effect of OPEC supply cutbacks on overall tanker demand, especially in the Arabian Gulf,” Mackay said.
During the fourth quarter of FY 2016, the company completed the sale of a Medium-Range (MR) product tanker and an older Suezmax tanker in November 2016 and January 2017, respectively, with one older Suezmax tanker sale scheduled to be completed in late-February 2017.
Since October 2016, Teekay Tankers entered into, and extended, time charter-out contracts for two Suezmax tankers and one Aframax tanker. These contracts have an average rate of approximately USD 20,800 per day and firm periods of 12 months each. The contracts commenced in December 2016 and February 2017.