Ardmore Shipping chief executive Anthony Gurnee says normal trading conditions for the product tanker market are expected to return and the outlook remains positive.
His optimism stems from continued strong underlying oil demand growth of 1.4m barrels per day for 2018 and 2019.
Also, ongoing refinery expansion and low refined product inventory levels.
Gurnee is also pinning his hopes on the January 2020 sulphur cap to spur a “significant” increase in seaborne volumes of refined products from mid-2019, lifting tonne-mile demand.
He says ongoing scrapping and the record low orderbook for medium range (MR) tankers should lead to net fleet growth of less than 1% this year and next.
The ingredients exist for a “rebound in charter rates,” says Gurnee.
His comments came despite the company reporting a sharply increased net loss of $8.6m for the three months ended June 30 2018. The year-earlier figure was a deficit of $1.9m.
Ardmore’s net loss at the halfway stage of the year of $13.7m compared to a net loss of $4.0m in the first six months of 2017.
The company currently has 28 vessels in operation comprising 22 eco MR tankers ranging from 45,000 dwt to 49,999 dwt, as well as six eco design IMO 2 product/chemical carriers of between 25,000 dwt and 37,8000 dwt.
The MRs trade on the spot market or in pools and earned an average of $11,510 per day during the second quarter of 2018 and $12,086 per day over the six months.
All its six product/chemical tankers were at the end of the second quarter trading in the spot market. During the three-month period they earned $12,527 per day.
Ardmore says net proceeds from the sale and leaseback of the 49,000 dwt product tankers Ardmore Endurance and Ardmore Enterprise totalled $10.3m after repayment of outstanding debt.
The company has reported ebitda of $7.6m for the three months to June 30, versus $12.9m in the corresponding period of 2017.
Ebitda for the six months came in at $17.5m, a decrease of $7.1m.
The board has not declared a dividend for the latest quarter but says it intends to maintain its policy of paying dividends equal to 60% of earnings from continuing operations moving forward.
Noah Parquette of JP Morgan says Ardmore's revenue has been impacted by a tough quarter and was slightly below its expectations.
MR rates were also below JPMorgan's forecast and "oddly below eco-mod MRs."
Parquette added:"ASC disclosed that 40% of its spot MR days in Q3 have been fixed at $10,000 vs. the market of $11,600 since mid-June.
"As comparison, Scorpio Tankers reported this morning that it fixed 40% of its MR days at $11,000. Chemical tankers are also tracking below our expectations."
