Ardmore Shipping is projecting a massive turnaround of its bottom line if the product tanker market stays hot.
The Irish product tanker owner reported a $933,000 adjusted loss for the first three months of the year, an improvement on the $8.48m loss in the same period of 2021.
But chief executive Anthony Gurnee said the second quarter could see the figure flip into the black by more than $20m.
He said the company’s MR tanker fleet was earning an average time charter equivalent (TCE) rate of $25,500 per day in the current quarter, rising to $34,400 per day in the last two weeks alone. In the first quarter, the average was $15,600 per day.
“Using the second quarter of TCE-to-date, with 50% complete, our net income would be $22m or at $0.63 per share for the quarter,” Gurnee said on Ardmore’s first quarter earnings call.
“The market environment has changed completely as a consequence of the war [in Ukraine] and its impact on the oil market, for which there is no clear end in sight.”
Those changes, he said, have “turbocharged the product tanker sector”.
The oil market has become characterised by dislocation in supply and demand, record-high refining margins and shifting sentiment regarding inventories while chemical buyers are looking further afield to make up for lost supply of liquid fertiliser and vegetable oils from Russia and Ukraine, Gurnee said.
In the chemical tanker market, Ardmore had been able to fix one of its ships to carry liquid fertiliser from Trinidad and Tobago to the UK at $32,000 per day, a move Gurnee likened to panic buying to cover needs expected to come from Russia.
“The chemical market is never quite as spiky as products, but we've heard averages of up to $50,000 a day,” he said, stressing that no ships in Ardmore's fleet had been fixed at those levels.
Gurnee also reiterated the market fundamentals he said were being overlooked given the changes created by the Russian invasion.
He believes restocking global inventories will take some time, rising refinery throughput and dislocation and a small orderbook portend well for the product tanker sector even without the war, a common refrain from tanker owners expecting the market to turn up this year.
Ardmore reported a bottom-line net loss of $7.85m in the first quarter, slimmer than the $8.5m loss logged in the same period of 2021.
