TANKER SHIPPING
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has reached the limit of our capabilities. The move from regional partner to global player would require a partner who shared our values and long-term thinking. We are proud that a quality company like Stolt wanted to purchase our business.”
SWINGS AND ROUNDABOUTS The announcement of the Jo Tankers deal came shortly after Stolt-Nielsen reported its financial results for the six months to end May 2016. These results showed some improvement in Stolt Tankers’ performance compared to last year as a result of lower costs and efficiency gains. Stolt Tankers reported operating revenue
of $535.0m for the first half 2016, down on the $563.5m posted a year earlier. Nevertheless, operating profit increased from $49.4m to $76.5m. The fall in revenues was largely due to lower bunker surcharge revenue as a direct result of lower bunker costs – the average price of intermediate fuel oil in the first six months of this year was $184/tonne, down 51 per cent on the $372/tonne averaged a year earlier. In addition, freight revenues in the deepsea
sector were 4 per cent lower overall than in the first half of 2015. This was the result of the disposal of four tankers for demolition, increased drydocking of timechartered vessels and repairs to two owned ships in the first quarter. Average freight rates were steady, with contract of affreightment (COA) rates up slightly and spot rates down by 5.5 per cent. On the other hand, Stolt Tankers carried more cargo under COA, particularly acids and Brazilian export loads, while spot business was down by 36 per cent. Regional fleet revenues in the first half
were up 2.4 per cent, largely as a result of the acquisition of three 5,800-dwt tankers from Odfjell in the middle of 2015. The marked improvement in operating
profit was also the result largely of the fall in bunker prices, although Stolt-Nielsen also reports lower voyage expenses and port disbursements. Another factor impacting profits has been increased depreciation. This has been necessary as Stolt Tankers has a well defined programme of retiring older vessels and the
slump in steel prices has had a knock-on effect on the price of steel scrap and the prices shipbreakers have been willing to pay for old ships, even those with high-quality steel content.
TRADING ENVIRONMENT The first half of 2016 was characterised by weak bunker prices and strong US exports to both Asia and Europe, helped by competitive US feedstock costs. Stolt Tankers’ outlook on market fundamentals remains unchanged, says the company. Global spot freight indices have been declining since the beginning of 2016 as owners have had to give back some of the benefit of lower fuel prices. The US remains the one strong export
region, and continued increases in export volumes drove up spot rates from the US Gulf to Asia and Europe in the first quarter. “While rates out of the US Gulf remain
strong, that peak has definitely passed,” Stolt- Nielsen says. Spot rates from other regions (Europe, Arabian Gulf, Asia) have declined since mid-2015, with those from Asia to the US and Europe being particularly hard hit as those ships benefiting from strong US exports have had to compete hard for return cargoes.
The clean petroleum products (CPP)
market has fallen somewhat, and medium range (MR) ships – swing tonnage – saw spot earnings fall from a high of $30,000/day in July 2015 to $10,000 to $11,000 per day by mid-2016, increasing competition for simple commodity cargoes. Continuing deliveries from a still-high
chemical tanker orderbook remain on the horizon and are expected to limit positive rate developments. This additional tonnage might be soaked up by further growth in US exports, although this would require a substantial increase in shipments to China, something that is uncertain under current market conditions. Stolt-Nielsen has continued with its measured fleet replacement programme; four deepsea tankers were retired from service and sent for demolition in the first six months of this year. While the new deliveries to the Jo Tankers joint venture will help replace those, Stolt Tankers’ own plans have been derailed somewhat, with the delivery of five 38,000-dwt newbuildings from China having been delayed for a few months. The first, Stolt Pride, was handed over in July. HCB
www.stolt-nielsen.com
WWW.HCBLIVE.COM
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