Denmark’s Torm reported a sharp rise in second-quarter profits on Thursday on the back of surging rates as the world emerges from Covid-19 lockdowns.

The company reported profits of $106.6m, up from $2.1m for the same period in 2021, as the product tanker owner benefits from rates doubling owing to stronger energy demands and the upheaval in trading routes following the Russian invasion of Ukraine.

The company said that prospects continued to look rosy with two-thirds of total vessel days booked for the third quarter at a fleet-wide average rate of $45,500 a day – a 50% increase in rates from the second quarter and better than analyst expectations.

Executive Director Jacob Meldgaard said: “The market has continued to improve into the third quarter of 2022, and so, far we have achieved rates which are more than three times as high as those we achieved in the third quarter of 2021.”

Torm has exploited the booming second-hand market to sell seven of its oldest vessels, with an average age of 18 years, since late 2021, adding $62.8m in liquidity, it said. Analyst Kepler Cheuvreux said the company had secured “firm” prices for the vessels.

They included agreements struck in the second quarter to sell two 2003-built LR2s, the 100,000 dwt Torm Ingeborg and the Torm Valborg. VesselsValue estimated their worth at $20m each.

It delivered four other vessels - the LR2 Torm Gudrun, LR1 Torm Emilie, the MR Torm Horizon and handysize Torm Tevere — in the second quarter. The handysize Torm Gyda was delivered in July 2022.

Brokers said the South Korean-built Tevere went for $8.3m to unknown Nigerian interests, TradeWinds has previously reported. The 75,000-dwt Torm Emilie (built 2004) was also reported to have been sold for $13.5m.

The company said its figures had benefitted from low global inventories and a historic low order book for product tankers, standing at about 5% of the existing fleet.

Demand from refineries had also seen the average MR benchmark in June 2022 reaching the highest monthly level since 2006.

The company, which has an 84-strong fleet, said the market was continuing to strengthen supported by increased trade volumes from the US, Europe and Asia, linked to the war in Ukraine.

Increased volatility

Torm said the impact on the tanker markets remains uncertain with EU sanctions imposed on Russia fully kicking in by early 2023.

“We do not expect any direct impact on our operations although we expect increased volatility in freight rates, bunker cost, foreign exchange rates and vessel values,” it said.

The Danish product tanker owner announced earlier this week that it had bought an ownership stake of 75% in ME Production (MEP), a Danish industrial company that builds exhaust gas cleaning scrubbers. Torm has to date installed scrubbers developed and produced by MEP on more than 50 of its vessels.