New York-listed Euronav fixed out a handful of vessels in the quarter and is this week reported to have secured a $40,250 per day contract for the 319,000-dwt TI Hellas (built 2005) with Petrobras.
Paddy Rodgers explained on a conference call today that the period charter market began to show increased depth during the second quarter, resulting in several contracts being signed.
"We have done this business not only because rates are attractive but also the length has increased," Rodgers said. "In addition, these deals have strengthened relationships."
He added: "It's important to stress by locking in more of our fleet on time charter Euronav is not calling the market.
"This is simply, as a large shipowner, active management of our fleet portfolio. If we think it looks like sensible business we do it."
Five year deals developing
The executive noted that charteres were now firmly in the market for three-year contracts and he was hearing rumours for five-year deals being reviewed.
"People are beginning to think this is a multi-year event and that they are beginning to get more and more concerned about that on the chartering side and therefore they are looking for cover," he said.
Rodgers dismissed suggestions from Amit Mehrotraof Deutsche Bank that Euronav was becoming more cautious on the market following its second quarter market commentary, stressing it was taking a phlegmatic view.
"We are very experienced and our view is never to get too hubristic or too carried away," he said.
Rodgers says the features which have secured a strong demand picture remain in place, including a low oil price.
"But it's tanker shipping and you have to have a very phlegmatic approach to it," Rodgers said during a question and answer session.
"I just think it's trying to stay balanced rather than have a differing view. We still think all the factors are in place for this to be a continued multi-year uptick."
A goldilocks situation
Rodgers says the $100 per barrel oil price was a cause of real demand destruction for the tanker market and he does not see that environment returning any time soon.
He notes Saudi Arabia has abandoned being the swing producer, Russia will continue to produce oil as a source of foreign currency and the US will not give up on the shale story easily.
"All in all, it looks like we are going to be in a relatively speaking low oil price environment for some time," he said. "As long as that's the case it will stimulate demand as it already has done."
He added: "Against that environment I think we could be in a situation which would be a happy medium, or goldilocks situation, where you have supply coming on but demand is always running just that bit ahead. So there is always that bit of tightness in the market and it remains that way on a multi-year basis."
