After dipping as the northern hemisphere weather warmed, Fearnleys Securities believes product tanker rates have hit an inflection point.
The Oslo bank said on Wednesday that the market has found its bottom at around $25,000 per day for MR tankers following earnings from Irish owner Ardmore.
“Product tanker rates are seemingly hitting an inflection point as we head into the seasonally stronger winter market with crack-spread developments implying demand drivers are there for rising refinery throughputs,” Oystein Vaagen of Fearnleys said.
MR rates have shown improvement over the last month, with Clarksons’ fleet weighted average for the ships rising 15.2% to $29,900 per day on Tuesday, higher than the quarter-to-date figure of $25,800 per day.
LR2 rates rallied during July, with the broker reporting a 20.9% jump on its fleet weighted average to $38,500 per day, and LR1s have improved by 4.3% to $32,300 per day over the same period.
Both figures are higher than their quarter-to-date earnings of $28,400 per day for LR2s and $27,300 per day for LR1s.
Baltic Clean Tanker Index, meanwhile, showed 10 consecutive days of improvement to hit 71 on Monday. The jump began after it fell to a 2023 low of 563 on 18 July after staying in the high 500 to low 600 range for most of the summer.
At current MR rates, Vaagen said Ardmore would be profitable, as even the estimated $25,000 per day bottom is $10,000 per day above its breakeven level.
Those rates and demand green shoots mean Ardmore’s “spot exposed MRs are set to reap the benefits of what we believe will be a solid winter market”.
The analyst said the market had already priced in rate dips, as Ardmore’s 26 MR and chemical tankers averaged $26,541 per day in the second quarter and have booked 45% of third quarter MR days at $26,100 per day and 63% of third quarter chemical tanker days at $20,400 per day.
For the second quarter, New York-listed Ardmore recorded a $23.7m profit, down from $28.8m for the same period last year.
Its shares on the New York Stock Exchange tumbled $0.33 to $13.75 on Tuesday and another $0.15 in after-hours trading to fall to $13.60.
