Norne Securities is calling time on the chemical tanker market rally.
Mindaugas Cekanavicius, analyst at the Bergen investment bank, said in a note on Friday that flat freight rates suggest the market is running out of steam.
“Following the flat chemical tanker rate development, we suggest that the ceiling of both the shipping cycle and the stock price might have been reached, or we are at the verge of it,” he said.
He reiterated a “buy” rating, but raised the target price for Odfjell’s A shares to NOK 190 ($17.38) from NOK 160 as he expects Odfjell results to improve when they report on 7 May.
The expectations are in line with what Odfjell guided in its fourth-quarter earnings, as ships began routing away from the Red Sea — where they could be targets for attack from Yemen-based Houthi militants — and towards higher rates.
But as Cekanavicius points out, chemical tanker freight rates have flattened so far this year, with the Rotterdam to Houston route stuck at $62 per metric tonne on a 5,000-dwt easychem vessel and from Houston to Ulsan at $115 per metric tonne according to Clarksons.
He said Odfjell is a “very solid company” and that the chemical tanker market overall is “far from worrisome”.
“However, there should be little positive triggers ahead and we value the market cycle to be close to the top,” Cekanavicius said.
Chemical tanker markets are expected to be strong given the departure of swing tonnage into product trades, rising gross domestic product globally and a small orderbook.
Over the past 52 weeks, Odfjell shares have climbed from lows of NOK 83 seen last summer to a high of NOK 178.20 last month.
Shares were trading at NOK 173.40 at lunchtime on Friday.
