Proportionate EBITD for the same period was $74.6 mill, compared to $149.7 mill in 3Q15.
Paddy Rodgers, Euronav CEO, explained: “Freight rates were lower during the third quarter with anticipated seasonal weakness throughout the quarter compounded by higher levels of less favoured vessel supply from several sources (returning dr dock, newbuilds, older tonnage) affecting tanker owners pricing behaviour. This was exacerbated, in particular for Suezmax vessels, by dislocation from reduced Atlantic basin oil production negatively impacting on tonne/miles.
Freight rates have now improved, underpinned by seasonal trading patterns, continued demand from the Far East and boosted in the short term by cargo activity from the Arabian Gulf, which is at record levels.
Euronav said that it anticipated a regular seasonal pattern for the fourth quarter in terms of freight rates. Scheduled vessel supply however, remains at elevated levels, which combined with no scrapping, will continue to present headwinds into 2017 for tanker operators.
The company also said that it retained access to substantial liquidity and maintained a robust balance sheet in order to remain strategically opportunistic to navigate potential short-term headwinds during periods of increased vessel supply, whilst at the same time remaining exposed to any potential upside from an improved rate environment.
Vessel supply remains a manageable feature with the VLCC orderbook representing 16% of the fleet and 14% for Suezmaxes on an adjusted basis. However, the company retained the view that there will be pockets of elevated supply, which will impact freight pricing and owner sentiment during this winter season and into 2017.
Shipowners have an obligation to retain discipline during such periods and focus on maximising returns rather than rates of utilisation, the company stressed.
The medium term structure for the tanker sector, however, was encouraging, driven largely by an adjustment to increased environmental regulation and a permanent structure of limited availability and higher cost of capital. This is reflected in a more restricted vessel supply picture medium-term, augmented by increasing capital discipline from owners.
Thus far in 4Q16, the Euronav VLCC fleet operated in the Tankers International Pool has earned about $23,958 per day and 56% of the available days have been fixed. Euronav’s Suezmax fleet trading on the spot market has earned about $19,569 per day on average with 57% of the available days fixed.
The drop in rates is illustrated by the third quarter figures for the two sectors in which Euronav is involved.
For example, the VLCCs operating in the TI Pool averaged $27,100 per day, compared with $52,368 seen in 3Q15. Euronav’s VLCCs operating in the timecharter market averaged $41,480 per day, compared with $43,516 per day in 3Q15.
As for the Suezmaxes, those operating on the spot market averaged $19,045 per day in 3Q16, compared with $40,048 per day in 3Q15. Suezmaxes operating in the T/C market averaged $21,576 per day during the period, compared with $30,944 per day in 3Q15.