Ardmore Shipping sees demand increasing for the rest of this decade, after a year of extreme volatility due to coronavirus.
The New York-listed shipowner has seen MR tanker rates rise "noticeably" in 2021, compared with the fourth quarter.
Levels have improved from $9,600 per day to $11,700 per day, driven by modest economic recovery and winter market activity, it said.
Chief executive Anthony Gurnee added: "Beyond the immediate post-pandemic recovery, we believe product tankers will experience continued overall demand growth to the end of the decade."
Damper on supply
Global economic growth and refinery developments away from points of consumption will more than offset the initial impact of the energy transition, he believes.
"We expect the energy transition to put a significant damper on tanker supply as new regulations such as EEXI [Energy Efficiency Existing Ship Index] accelerate the phase-out of inefficient vessels, resulting in a tight market," he added.
The Ireland-based product tanker owner posted a net loss of $19.5m in the fourth quarter, including a $6.4m loss from selling one vessel. It was $1.9m in the red in the same period of 2019.
Revenue shrank to $41.7m from $60.7m.
Adjusted loss was $0.39 per share, a slightly better performance than analyst consensus expectations of a $0.43 loss.
The annual net loss came in at $6m, against a loss of $22.9m in 2019, but Gurnee preferred to see the positives, with the tanker sale loss stripped out.
"Overall, despite the pronounced weakness in the fourth quarter, we are pleased to report a profitable year, with adjusted earnings of $0.5m, eco-design spot MR performance of $15,990 and year-end cash at $58m," he said.
Conventional MR tankers earned $9,436 per day in the fourth quarter, while the eco-MRs reached $9,603 and chemical tankers $10,916 per day.
Gurnee said 2020 had seen the most extreme period of volatility in many years.
During the first half, MR tanker rates rose to record highs, peaking at $77,000 per day. The second half saw numbers plumb new depths as the pandemic affected oil demand and cargo volumes.
Gurnee expects chemical tanker performance to improve over 2021, given the high correlation of demand to global GDP growth.
"Overall, we remain cautious about the first half of 2021, but believe the second half will bring rapidly improving market conditions and set the stage for a full recovery driven by above-trend demand growth and constrained product tanker supply growth," he added.
Ardmore said it is moving to "partly de-risk near term cash flow" by fixing three of its MRs on one-year time charters at an undisclosed rate.
Evercore ISI analyst Jonathan Chappell asked on Wednesday's quarterly earnings call how Gurnee would reconcile the charters with the view that the market will improve throughout 2021.
"We think it's going to be choppy for the next number of months," the CEO said of the market.
Competing priorities
"We think the rates [on the three charters] reflect how the year is going to play out," he added, suggesting a figure "in the high teens".
"We don't think we're leaving a lot on the table."
Asked by Chappell whether it might be time to expand the fleet at the bottom of the market, Gurnee was non-committal on new spending.
"There are a lot of competing priorities here — we also want to remain financially conservative," he replied.
