Tanker owner and pools giant Navig8 Group is predicting soft rates over the next few months, but product tanker demand should recover more quickly than that for crude ships.
Group chief executive Nicolas Busch said the company has continued to trade profitably over 2020 with a diversified business and versatile fleet.
"As expected, markets weakened substantially in the quarter and we anticipate they will remain soft in the coming months as usually higher seasonal demand is heavily dampened by the ongoing economic effects of Covid-19," he added.
Busch was writing in the third quarter results report of the group's investment company Navig8 Topco.
The shipowner sees product shipping demand picking up ahead of crude, primarily driven by gasoline refined from crude inventories that will be gradually unwound in support of a post Covid-19 recovery.
A local problem
"However, global refinery run rates are yet to recover and, subjected to prolonged margin weakness, a rise in refinery rationalisation is increasingly likely, with up to 1.4m barrels per day of capacity at risk of closure in Europe alone," Navig8 Topco added.
But these plants typically service local demand, in contrast to the export orientation of the many new refineries in Asia and the Middle East, so clean tankers should still emerge stronger after the rationalisation.
The near-term outlook looks soft for product tanker rates, but the medium-term forecast is in line with positive indicators for crude tankers: a low orderbook, an ageing fleet and demand expansion to boost tonne-mile figures.
For crude tankers, the end of the eight-month Libyan ports blockade is good news, the company said.
Production has risen faster than expected, and is set to reach 1m barrels per day by the end of 2020, Navig8 Topco added.
This should primarily benefit suezmax and aframax vessels "in time", the company said.
Profit rising
Net earnings for Navig9 Topco hit $11.2m in the quarter, up from $6.7m in 2019, as operating costs fell.
Revenue declined to $671.2m, however, compared to $819.5m the year before.
Navig8 Topco owns or partially owns one VLCC, eights LR2s, an LR1, 11 MRs and two bunker tankers.
Overall Ebitda rose to $45.4m from $27m, while the figure for commercial management, technical services and bunker procurement was $9.2m, down from $10.8m in 2019.
Tankers and chemical carriers operating in the Navig8 pools generated average time charter equivalent earnings of $19,474 per day and $14,008 per day respectively.
This was up 23% for tankers, but down 1% for chemical ships.
The company managed 79 tankers in pools, as well as 47 chemical carriers.
Navig8 Topco's own newbuildings helped produce Ebitda of $36.2m for the owned fleet, up from $16.2m last year.
Depreciation for the quarter was higher at $22.1m, against $8.2m in 2019, due to the application of depreciation to the full 16-vessel newbuilding fleet, of which only 10 had delivered as at 30 June 2019, and to capital leases.
Cash and bank balances amounted to $167m, up from $153.5m a year ago.
