The CEO of Concordia Maritime, Kim Ullman, believes there will be enough approved marine fuels available across global ports to meet the new sulphur limit that enters into force in 2020.
As a result, the Swedish tanker owner and operator plans to meet the requirement by bunkering compliant fuels and is staying away from exhaust gas technology for now.
“We are therefore not planning to invest in scrubbers here and now,” he said.
Concordia Maritime reported red ink in the third quarter amid lingering weak tanker market keeping freight rates at low levels.
The company’s net loss before tax for the third quarter was SEK 66.9 million (USD 7.4 million), a considerable improvement from last year’s equivalent of SEK 533 million net loss. EBITDA was SEK –18 million, corresponding to USD –2.1 million. For the first nine months of the year, the company booked a net loss of SEK 162 million, also slashed from SEK 618 million reported in the same period in 2017.
“For a long time, we have predicted that the turnaround would gradually materialise in the second half of 2018 – mainly towards the end of the year. And we can now see that it is actually happening. An improvement has been noted after the end of the quarter – at this stage mainly for crude oil, but we expect to see the same trend for product tankers as we approach the end of the year,” Ullman said.
The turnaround came first in the VLCC segment, where rates have risen from USD 9,000 per day in September to about USD 50,000 per day in November. For Suezmax tankers, the rates have more than doubled in a short period – from about USD 10,000 per day to USD 25,000 –30,000 per day in November.
As explained, recovery of product tankers is lagging behind a little, but improvements are being noticed. In certain specific regions, such as the Americas, spot contracts for MR tankers are priced at USD 15,000–18,000 per day – double what the situation was just a few weeks ago.
Among the main drivers supporting tanker market recovery are OPEC’s gradual output increase of between 500,000 and 1,000,000 barrels of oil per day since July, combined with phasing-out of vessels through recycling.
Ullman explained that the third quarter of 2018 marked a clear bottoming-out of the market and that gradual improvement is underway.
“Now we look forward to grasping the opportunities that a stronger market presents. However, it is important to remember that it will take some time before the improved market brings profitable levels for tanker companies specializing in product tankers,” he concluded.