The Belgian tanker giant reported a net profit of $0.1 mill for 4Q18, compared to a net loss of $58.7 mill in the third quarter of 2018. However, the year-on-year profit was lower, as 4Q17’s profit came in at $19.4 mill.
Proportionate EBITDA (a non-IFRS measure) for 4Q18 was $108.5 mill, compared with $95.7 mill in 4Q17.
CEO Paddy Rodgers said; “The VLCC trading performance in 4Q18 gives an important signal on the structure of the large crude tanker market. VLCC freight rates trading at rates not seen in the last two years demonstrate an already tight balance between tanker demand and supply.
“The factors impacting the crude tanker market are very dynamic and likely to remain so for the foreseeable future. The fundamentals, such as oil demand, tonne/mile expansion and vessel supply remain on an improving trajectory that should be reflected in a healthy rate environment,” he said.
The 4Q18 result was affected by a number of exceptional non-cash items, including a capital loss of $3 mill on the sale of the Suezmax ‘Felicity’.
Talking about the market, Euronav said that despite recycling activity slowing during the quarter, the large tanker fleet had matured as the average VLCC age in the global fleet had risen by 24% to 9.5 years since 2014.
This, along with restricted access to capital for many operators, implied time expired vessels will be a consistent feature going forward, driving recycling activity and restraining fleet growth.
For 2019, absorption of an above average orderbook was the key challenge for tanker operators, according to Euronav, and specifically during the first half of this year. Around 79 VLCCs are set to enter the global fleet, while 14 Iranian VLCCs are expected to exit.
Preparation for IMO 2020 is also expected to reduce VLCC equivalent capacity given voluntarily drydocking for scrubber retrofitting and US crude export capacity is anticipated to expand as pipeline constraints are lifted from mid-year.
OPEC-led crude supply restrictions are also anticipated to bite during the first half of the year.
Going forward, Euronav said that there were many opportunities from IMO-driven disruption in reducing capacity, further US export led supply expansion, a substantially lower spot oil price stimulating demand and re-establishing a contango pricing structure.
So far in 1Q19, Euronav’s VLCC fleet operating in the Tankers International Pool earned about $41,000 per day and 43% of the available days had been fixed.
In addition, Euronav’s Suezmaxes trading on the spot market averaged about $32,700 per day with 36% of the available days fixed, the company claimed.