Belgian tanker giant Euronav is increasingly optimistic about market prospects towards the end of this year as rates continue to rise.
In its second-quarter results statement, the New York and Brussels-listed VLCC and suezmax specialist revealed spot rates so far in the third quarter have averaged $12,700 per day for 47% of VLCC days, with suezmaxes at $23,900 for 49% of days.
This compares to $17,000 for VLCCs in the second quarter and $11,250 in the same period of 2021.
For suezmaxes, these figures were $20,000 and $10,500, respectively.
But freight rates for fixtures in recent weeks in both sectors have been “substantially” above these levels, indicating a tightening of the market ahead of the winter trading season, the shipowner said.
And Euronav added that “dislocation” from the Russia-Ukraine war, a key driver of tanker markets, means the movement of crude is likely to stay less efficient as Europe recalibrates its imports from Russia to Atlantic and Middle East-sourced barrels instead.
“This current trend has further to run and will likely expand as other nations diversify their crude suppliers,” the company said.
This should drive longer tonne-miles as crude travels further, absorbing additional vessel capacity now and in the future, Euronav argues.
Chief executive Hugo De Stoop said: “Recent trading data points — such as China’s return to crude procurement, vessel supply metrics and improved oil supply — have underpinned a recovery in the freight markets which is unusual for the season,” De Stoop said.
“Euronav is ideally placed to benefit from the shorter-term cyclical recovery but also the robust medium-term fundamentals of our market,” he added.
Loss reduced in pivotal period
The company’s net loss was $4.9m in the three months to 30 June, from a deficit of $89.7m a year ago. Revenue grew to $149m from $99m.
Fearnley Securities said the company had missed analysts’ consensus expectations, with Ebitda of $47m well below the forecast $65m.
It had predicted Ebitda of $45m, however.
De Stoop described recent months as pivotal for the company, with freight markets improving substantially since March.
The company has also increased future fixed-income streams to 2032 after it bought out International Seaways’ share in two floating storage and offloading (FSO) vessels.
“Third, during the quarter we undertook a significant rejuvenation resulting in a reduction of the average age of our fleet and still have 10% organic core fleet growth to come from vessels under construction over the next 18 months,” the CEO said.
And the combination with John Fredriksen’s Frontline is expected to take another step forward in the fourth quarter, when Frontline is due to launch an offer for Euronav’s shares.