Product tanker company Ardmore Shipping nearly doubled its quarterly loss but reported progress on the energy transition front as its e1 Marine unit managed to sell its first hydrogen generator.

The deal, which is part of a pilot project by an unnamed "leading US-based global marine engine manufacturer", was concluded "on profitable terms" and is expected to lead to a commercial licencing agreement, Ardmore said on Wednesday in an earnings release.

Ardmore has a 33% stake in e1 Marine, a joint venture it co-owns with clean energy technology developer Element 1.

Element 1, in which Ardmore owns a 10% stake, has struck a joint research agreement with Aramco Americas to apply a carbon capture system to Element 1's hydrogen generator.

These are "multiple positive developments" for e1 Marine, Ardmore chief executive officer Anthony Gurnee said in the release.

Ardmore's traditional tanker business, meanwhile, continued racking up losses on sluggish freight rates for its MRs and chemical tankers. Net loss rose to $12.8m for the third quarter compared with a deficit of $6.6m in the same period of 2020.

Between January and September, the net loss more than doubled to $29.5m from $13.5m.

The company didn't pay a dividend for the third quarter.

Recovery 'well underway'

According to Gurnee, however, the worst is over.

"We believe that we have now reached a turning point, with the product and chemical tanker markets showing signs of real recovery," he said in the press release.

As oil inventories are being depleted, Gurnee said he believed that the market is "now very close to an inflection point for product and chemical tanker demand", which should lead to a rebound in freight rates.

"A full oil demand recovery is now well underway," he added.

Ardmore has a fleet of 27 vessels, consisting of 21 MRs and six smaller chemical tankers with a capacity between 25,000 dwt and 37,800 dwt.

Spot MR voyages Ardmore booked over the last couple of weeks have averaged $15,300 per day, while one-year timecharter rates for its eco-design MRs reached $15,500 per day.

That is an improvement to the average $10,904 that Ardmore’s MRs were earning daily in the third quarter, in terms of timecharter equivalent (TCE) rates.

"On this basis, we expect a much improved second half of the fourth quarter and a good run through the winter," Gurnee said.

Additional factors may lift rates even further, he added, citing low inventories of refined products around the Atlantic, power generation switching to oil in the wake of rising natural gas prices, as well as typical winter weather disruptions.