Odfjell chief executive Kristian Morch is not popping open the bubbly just yet, despite the company being on track to end 2020 in profit.
He cautioned that the pandemic was still making market clarity difficult to achieve, but he added that fundamentals look strong.
Asked on a second-quarter earnings call whether the chemical tanker and tank terminals group would end the year in the black, the chief executive said: "We have had a good start to 2020, but we are going to leave the champagne in the cooler a little while yet because there is great uncertainty.
"You can paint a very positive picture, but you can also paint the opposite, so it's really difficult to see clearly."
He added, however, that it would take a lot for the company to not come out of 2020 on a positive note.
"But this is not guidance. We are on the right track," Morch said.
Best result for years
Odfjell posted its strongest quarterly profit for some years on Thursday, ending $30.9m to the good.
Increased spot exposure in a rising market meant more income as its contract of affreightment (COA) coverage fell to 35% during the three months to 30 June.
However, COA coverage increased towards the end of the quarter and has continued to do so into the third quarter, where it is expected to stay within 45% to 55%, the company said.
Morch said chemicals demand is still growing despite Covid-19 lockdowns.
He explained that the cut in COA coverage was partly the company's choice and partly as a result of customer actions.
Customers in a scramble
"The world was and still is a very uncertain place. Many of our customers were scrambling to understand and control their inventories," he said.
"There was a lot of rebuilding of stock. They reduced throughput quite dramatically and the number of nominations was down."
Morch added that the company took a deliberate decision to redeploy ships into different trades.
He said: "We do not expect to see a continuous drop [in coverage]. We are seeing a stabilisation of contract coverage at between 45% and 55%, which is a sweet spot for Odfjell."
The shipowner has been boosted by product tanker swing tonnage moving out of the chemicals trades.
Morch said in March that up to 24% of MRs were trading in chemicals, but now this has dropped to below 20%.
Not an easy switch
"With clean markets falling you might see some of that return, but it's not that easy actually when you look at what it takes to swing a ship back into chemicals from trading in vegoils," he added.
"We are getting some help from reduced swing tonnage. It's a fairly robust supply/demand picture."
Chief financial officer Terje Iversen said that Odfjell's time-charter rates ended the quarter at $22,000 per day on average.
If it can add $1,000 per day to this, which should be more than possible based on historical trends, the yearly result would be boosted by $25m, he added.
Iversen said the company is somewhere between a low and a mid-cycle in terms of time charters.
