Product tanker giant Hafnia believes the time is fast approaching when it will make sense to lock in its LR1 ships on period charters.
The BW Group-owned company’s commercial executive vice president, Jens Christophersen, told an earnings call: “On the LR1 side, we’ve been sitting on our hands for the past couple of years. Our coverage is virtually more or less zero right now.
“So it would be natural for us to start building on some of that, as some of these longer-term deals are starting to look increasingly attractive.
“Looking into the next half-year, we think we could be in an incredibly tight spot market and there’ll be opportunities where we would be looking to capture value further out the curve.”
On the bigger LR2s, Christophersen said the US and Oslo-listed group has a fairly high degree of contract coverage.
“We have dual-fuel LR2s that have recently been delivered which are on long-term charter and we’ve had some of our existing LR2s on longer-term charters that are expiring in the more near-term,” he told the call.
“So our numbers do not reflect a pure 100% presence to the spot market here. Right now the spot market looks incredibly tight on the LR2s.”
Hafnia revealed in its first-quarter results that it is sitting on ship purchase options worth $120m for eight chartered-in tankers, allowing it to “capitalise on asset-value appreciation”.
The owner has not gone into details on the vessels involved.
Cheaper to charter
But some of these options are exercisable immediately.
The average price of its LR1 options is $40.8m each, with MRs averaging $29.1m.
Hafnia said the option price decreases by a fixed amount per year.
Thomas Andersen, head of investor relations, told the call: “Generally the purchase options can be exercised quite regularly, some within quarter-by-quarter and some within year-by-year.
“Overall as far as we see them, it’s cheaper to keep them as chartered-in vessels than buying them as of now.”
