Crude tankers muscling their way into product trades is trickling into the chemical tanker space, but Odfjell insists it is still a strong market.
The Oslo-listed, Bergen-based chemical tanker player’s time-charter revenues came in at $202m for the quarter, down year on year, in part due to 6% of all product tankers dropping into chemical trades during the period.
The incursion sent the company’s proprietary Odfix index — which tracks its average TCE earnings — down 6.6% versus the 6.3% drop seen by the Clarksons Chemical Tanker Market Spot Index.
Odfjell chief executive Harald Fotland said during the quarter’s earnings call: “Crude tankers winging into products is forcing MRs and handy size product tankers to swing into easy chemicals. That is again taking away products from the core chemical tanker fleet.
“We believe this swing is one of the contributing factors as to why we’ve seen a decline in our spot index.”
It was a trend he expected to continue into the fourth quarter, with the last stanza of 2024 looking weaker than the third quarter.
But Fotland insisted that the overall chemical tanker market is the strongest it has been in more than a decade.
“In the second quarter, we delivered a historic result that will be difficult to beat at least in the near future,” he said.
“We delivered $36,000 [per day] in average time-charter earnings which is an absolute record for Odfjell ever. Now we are delivering a result that is slightly below that record quarter.”
Kpler said crude tankers finding profitable business in product trades was the tanker market’s dominant narrative over the summer.
The trade analytics company said crude tankers sopped up 10% of all clean tanker tonne-miles during the warmer months, while Steem1960 Shipbrokers said the share of vessels typically used in crude trades carrying petroleum products hit roughly 65m tonnes in July and August.
Clarksons has argued the moves have kept a lid on product tanker rates, with LR2s earning $38,000 per day versus the $55,000 per day they could have earned without the competition from crude tankers.
For the quarter, Odfjell reported a $71m profit for the quarter, down from $88m in the second quarter but up from the $51.9m recorded in the third quarter of 2023.
The $202m TCE revenue figure fell from $215m in the second quarter but was up from the $184m year on year.
Average TCE rates came in at $33,900 per day.
Fearnley Securities and DNB said the results came in below expectations, which will put pressure on fourth-quarter expectations.
The quarterly results sent Odfjell’s class B shares tumbling, falling NOK 7 ($0.63) to NOK 114.
