Cosco Shipping Energy Transportation has forecast a potential 80% decline in its first-half results compared with last year.
The Hong Kong-listed company expects to report net profit for the first six months of 2021 of between CNY 503m ($77m) and CNY 603m, against the CNY 2.95bn achieved 12 months ago.
“During the first half of 2021, against the backdrop of slow recovery of global oil demand, the ongoing implementation of the Opec+ production cut agreement that accelerated destocking, and the oversupply that led to the continued sluggish international oil shipping market, coupled with the year-on-year increase in international fuel prices, revenue from the international oil shipping market continued to hover at a historically low level,” the company said.
“The daily time charter equivalent (TCE) of the TD3C (Middle East-China) route for VLCCs for the first half of 2021 plunged to the negative territory several times with the average daily TCE of -$311 per day, representing a decrease of about 100.38% as compared with that in the same period last year,” the shipowner added.
Cosco Energy said that despite the adoption of measures such as slow steaming, the poor market sentiment still led to a year-on-year decline in the revenue for the group’s tanker segment.
Earlier this year, the company said it was hoping to out the current tanker market downturn with time-charter coverage and stable LNG business.
In a briefing to investors in April, it said the company’s bottom line was cushioned by forward coverage, with about 15% of the company’s oil tanker capacity for international trade fixed on period business.
The charters were said to have daily rates of between $25,000 and $69,000 and most of the ships had been fixed out for a year or longer.
The company saw net profits rise to CNY 2.37bn last year from CNY 432m in 2019, mainly due to strong charter rates in the first half. Yearly revenue increased to CNY 16.4bn from CNY 13.9bn.
Cosco Energy, which has more than 160 LNG, crude, and product tankers, is expected to publish its interim results sometime in August.
