Tankers drag Euronav to a loss

Mar 22 2019

Due to the challenging freight markets last year, Antwerp-based tanker owner Euronav suffered a loss of $110 mill for 2018, compared with a profit of $1.4 mill in the previous year.

For the fourth quarter of last year, the company recorded a profit of just $280,0000, compared with $19 mill in 4Q17.

Revenue was higher for the full year at $600 mill, compared with $513 mill in 2017, while for 4Q18, the revenue was $236 mill, compared with $118 mill in 4Q17.

EBITDA was $235 mill for 2018, compared with $273 mill for the previous year and $103 mill for 4Q18, as against $88 mill reported for 4Q17.

Paddy Rodgers, Euronav’s outgoing CEO, said: “For most of the year Euronav faced one of the most difficult and challenging freight markets the tanker industry has experienced in recent times. A combination of reduced cargo supply from self-imposed OPEC production cuts and excess supply of large tankers provided sustained downward pressure on freight rates until the final quarter of the year.

“The difficult trading environment had the benefit of driving a rebalancing between vessel supply and demand with fleet maturity, which we believe has now returned to longer term averages. In our view, the recovery in freight rates during Q4 and into 2019 indicates the dynamic between supply and demand is near equilibrium,” he said.

According to the IEA, global oil demand growth will remain at relatively strong levels in 2019, with the average daily oil demand surpassing 100 mill barrels per day for the first time. Incremental demand will come predominantly from China and India, but also from the US.

Another important contributor to incremental supply in 2019 is Brazil, where delays to a number of projects that were due to commence production last year have pushed the incremental barrels into 2019.

This geographical imbalance of incremental demand and supply is positive for the crude tanker markets as long haul travels will take capacity out of the market with a tightening effect. Euronav said.

In terms of fleet growth the first half of 2019 is expected to see a large influx of VLCC newbuildings, while the Suezmax market is expecting a more moderate newbuilding programme.

Euronav said that it believed a number of market factors will help to absorb these new ships, such as increased demand for large tankers, due to the expansion in US exports, vessels going into counter-cyclical drydocking to retrofit scrubbers, and that there is a potential for an increased number of vessels going into storage, as the market prepares for the IMO 2020 deadline. Recycling activity is also anticipated to continue in 2019 as the global fleet age is now back to longer term average levels.

All things considered, 2019 is expected to present a turning point in the freight market. The market appears to be reaching a point of equilibrium in terms of fundamentals with tanker owners able to benefit from the freight rate improvements that a more balanced tanker market tends to present, the company said.



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