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LOOK TO THE EAST RESULTS • ODFJELL TANKERS REPORTED SLIGHTLY BETTER FINANCIALS IN THE THIRD QUARTER AND, WITH THE FUNDAMENTALS LOOKING GOOD, EVEN BETTER TIMES LIE AHEAD IT IS NO SECRET that many international supply chains, particularly in containerised sector, are currently strained to unprecedented levels, with major congestion at ports around the world. Less well publicised is the fact that similar issues are affecting the deepsea chemical tanker sector too. Speaking on the release of Odfjell Tankers’ third quarter results, CEO Kristian Mørch said this: “The chemical tanker market was strong in the eastern hemisphere, but continued supply disruptions in the west (in particular the US) remain a challenge.” More specifically, ongoing US supply disruptions were exacerbated by additional weather-related shutdowns; those also affected the refining sector, leading to a weak market in the clean petroleum product (CPP) trades and an influx of swing tonnage into the chemicals sector. It was not all bad news, though, as lower US chemical exports were partly offset by strong nominations for Far East liftings, which improved the availability of backhaul cargoes for the deepsea fleet. Overall, Odfjell Tankers reports that volumes were stable in the third quarter, although the cargo mix was less favourable as tankers had to lift CPP cargoes out of the US. Swing tonnage also cut into vegoil volumes. As a result of all this, Odfjell Tankers managed to achieve timecharter earnings of $125.0m in the third quarter, slightly up on the prior quarter but down from $128.5m a year earlier. EBITDA also strengthened
WITH LITTLE APPETITE FOR NEWBUILDING, THE CHEMICAL TANKER MARKET IS ANTICIPATING TIGHT SUPPLY IN THE FUTURE
HCB MONTHLY | DECEMBER 2021
somewhat from the second quarter and the adjusted net loss improved from ($10m) to ($4m). FLEET ADJUSTMENTS One element in the profit adjustment was a $21m impairment booked in relation to the agreed sale of Odfjell’s last three owned short-sea regional vessels operating in Asia. The sale marks the exit of Odfjell from this segment, with a fourth ship on timecharter also due to be redelivered to owners in January. “These vessels have not been able to deliver satisfactory results and we have consequently taken the decision to exit this niche market,” Odfjell says. Following the closing of the sale in early 2022, Odfjell will focus solely on deepsea tanker operation. Odfjell has also concluded the sale of two
ethylene/LPG carriers to BW Epic Kosan, again marking its exit from the gas tanker sector, although the deal has left it with a small shareholding in BW Epic Kosan. “The exit from gas and our last short-sea vessels operating in Asia concludes the streamlining of our deep-sea platform,” Mørch noted. Mørch was also optimistic about the prospects for the chemical tanker sector, acknowledging that the remainder of this year still looks likely to be constrained. “There are signs of improvements in our markets, but it will take time for a recovery to materialise,” he said. That optimism is grounded in supply-side factors. There is currently little appetite from owners for newbuildings: costs are high and there is a great deal of uncertainty over future environmental restrictions, making it risky to invest now. Meanwhile, the global chemical tanker fleet is ageing, with an increasing proportion of the current fleet now over 20 years old. Those older stainless steel tankers are moving out of core chemical trades into “retirement trades” and, while the overall fleet is still growing slowly, the orderbook has shrunk dramatically and aggregate cargo volumes remain on a positive trend. Tonnemile demand is expected to outpace net fleet growth over each of the next four years, Odfjell calculates. www.odfjell.com
