Russian shipowner Sovcomflot (SCF Group) believes the worst is over for tanker owners after a tough year so far.
The Moscow-listed group said the sector has begun to show initial signs of recovery, with a seasonal uplift in charter rates seen since October.
Its conventional tankers remained under pressure in the third quarter, as spot rates sank to historically low levels, due to ongoing Covid-19 restrictions impacting international trade and economies.
But the company said: "SCF is cautiously optimistic that the market is coming through the trough of the cycle, as the group's expectations of a seasonal uplift in rates begin to materialise."
Sovcomflot added that demand for oil transport is recovering as oil product consumption heads towards pre-pandemic levels.
"At the same time, high steel prices are both encouraging an increase in vessel demolitions and discouraging owners from adding further newbuildings to the supply side," the group said.
Ship sales add to liquidity
The shipowner has banked $132.6m from selling older vessels this year: four crude tankers, four product carriers and two panamax bulkers, completing its exit from dry cargo operations, as TradeWinds has previously reported.
Revenue from conventional tankers was down by 52.5% at $252.5m over the first nine months, compared to 2020.
The net profit from the division was $103.6m. The group did not give a comparative figure.
Chief executive Igor Tonkovidov said the company's assumptions of a recovery in the tanker market are now starting to become evident.
"The combination of a rebound in demand and tightening supply should lead to an improvement in freight rates," he said.
Group earnings take a hit
Overall group net earnings dropped to $20.2m in the nine months to 30 September, against $249.5m in the same period a year ago.
Revenue dipped to $1.16bn, from $1.29bn.
The group's contract backlog rose by $1.3bn to hit a staggering $24bn.
Sovcomflot grew its fixed-income industrial business portfolio with nine new contracts: seven for LNG carrier newbuildings and two new deals for shuttle tankers.
This division contributed $544.3m to revenue in the nine months, up 8.6% year on year, and net earnings hit $445.9m, a rise of 10.5% from 2020.
Tonkovidov said: "Our industrial business segment performed strongly, consistently and in line with previous guidance.
"New additions to SCF's contract backlog will further strengthen our industrial business, giving us confidence in the long-term visibility, stability and growth of cash flow from infrastructure projects," he said.
