However, the losses incurred were down on the previous year’s figures of a negative SEK57 mill and SEK95.7 mill,respectively.
Total income was SEK252.7 mill and SEK563.4 mill for the 2019 periods under review, compared to SEK227 mill and SEK426.6 mill for 2Q and 1H 2108, respectively.
EBITDA expressed in US dollars was $5.6 mill for 2Q19 and $14.5 mill for 1H19, compared to minus $1.2 mill for 2Q18 and minus $0.3 mill for 1H18.
Total liquid funds stood at SEK252.7 mill at the end of 2Q19, which included unused credit facilities.
Developments during the second quarter were largely as expected, Concordia said – namely, weak but still stronger than the corresponding quarter the previous year. Among the reasons were OPEC’s production cuts, extended seasonal maintenance of refineries prior to IMO 2020 and extensive deliveries of new vessels.
The increase in the number of vessel deliveries is largely due to delays, as the vessels should have been delivered in 1Q19 but came into service in the spring instead. Normal refinery maintenance has been longer and more extensive than usual this year, due to conversion work and preparations for IMO 2020.
Overall, increased supply of vessels in combination with lower demand for transportation to and from refineries has contributed to lower market rates.
During 1H19, the tanker markets produced voyage result per day levels that exceeded the corresponding period in the slump year 2018 by 50-100%.
Concordia said that its view of market developments going forward is largely unchanged. Several factors still point to a gradually stronger market in autumn. In addition to positive fundamentals in the form of sustained high demand for oil, seasonality and declining net tanker fleet growth, US exports of crude oil and oil products and the consequences of IMO 2020 are also helping to create exciting conditions.
With regard to OPEC’s production, the company said that it had expected a decision on a gradual return to normal production rates at the July meeting. This did not turn out to be the case. If the decision to extend the production cuts persists, the extra boost hoped for is unlikely. How this will transpire remains to be seen.
Continuing production cuts would continue to decrease OECD oil stocks, which are currently in line with the important five-year average. It is therefore not beyond the realms of possibility that OPEC will reconsider its decision as early as this autumn.
As a consequence of the belief in a gradually stronger market, Concordia decided not to extend the charters of ‘Stena Paris’ and ‘Stena Provence’ during 2Q19. Instead, the company has signed a consecutive voyage charter agreement with a Brazilian customer for a new route between the US and Brazil. Under the agreement, the charterer uses the entire capacity of two P-MAX tankers at a freight price level considered to be satisfactory. The contract runs until 2Q20.
The increased risk situation in and around the Strait of Hormuz is unfortunate. About a third of the world’s total oil transport passes through the strait. Concordia’s vessels also regularly use this route. Each individual trip is assessed from a safety perspective, with crew safety the overriding priority. At present, the company’s ships only pass through the area with a military escort, which has worked well thus far, Concordia explained.