Weak start to 2018
The tanker market began 2018 just as weakly as it ended 2017. OPEC’S production cuts continue to have a negative effect on transport demand. However, underlying demand for oil and oil products is good and the previously high stock levels will soon be down to more normal levels, which in the long term will affect the market positively. Overall, the weak market led to a negative result for the quarter. Result before tax was SEK –38.7 (–41.2) million. EBITDA was SEK 7.0 (29.3) million, corresponding to USD 0.9 (3.3) million.
We continued the process of adapting and positioning the fleet during the quarter – partly in response to the weak market, but also to prepare for the upturn we expect in the second half of 2018. During the quarter, we decided to charter in another two MR (ECO) vessels. As with previous charters, these are joint charters with Stena Bulk, and Concordia Maritime’s share amounts to 50 percent. In parallel, we extended the contracts for the currently chartered MR (ECO) vessels. By chartering in a total of six vessels we have now increased earning capacity significantly.
At the same time, we continue our efforts to identify niche trades for our P-MAX vessels, where their unique properties are particularly beneficial. Earnings in the product tanker segment contributed to another quarter of higher earnings than the overall market. In the product tanker segment, our earnings were just over USD 14,000 per day, compared with the market average of about USD 10,000.
No incidents and continued reduction of environmental impact
We were spared from any serious incidents and accidents during the quarter. This is the result of focused efforts, with considerable resources being allocated to training and education, compliance with procedures and monitoring of processes. Nothing comes before the safety of our crews on board. This is our highest priority, regardless of economic or market conditions. We have also continued our efforts to reduce vessel-related environmental impacts. Total bunker consumption was reduced by 0.2 tonnes per day during the quarter. This in turn reduced carbon dioxide emissions by more than 349 tonnes, sulphur oxide emissions by 4.5 tonnes and nitrogen oxides by 9 tonnes (12 months rolling).
Market outlook 2018
It is important to point out that our operations are functioning impeccably. We have well-managed, flexible ships, qualified crews and an efficient technical and commercial operation. Financial development is entirely a consequence of the current weak market.
Our assessment of future development is unchanged. We still believe that the market will gradually strengthen from mid-2018 onwards. We expect that the return to normal production rates in OPEC and other oil-producing countries, in combination with generally increased demand for oil and a return to more normal stock levels, will contribute to increased transport demand. Deliveries of new vessels have slowed, while scrapping of older vessels has accelerated. A total of 66 vessels were scrapped in the first quarter of 2018, which is two-thirds of total scrappings for 2017. Taking all this into account, we continue to expect increased demand for tanker transport and a progressively more balanced and stronger tanker market in the second half of 2018.