Torm CEO after large deficit: Market has already turned
BY DANIEL LOGAN BERG-MUNCH, SØREN PICO
Published 15.11.18 at 15:27
The recovery of a miserable product tanker market is well underway, says Executive Director Jacob Meldgaard in an interview with ShippingWatch after the company delivered yet another significant deficit in the third quarter.
The product tanker recovery is underway, says Torm Executive Director Jacob Meldgaard, even though the shipping company has just gone through the worst market seen in the eight years he has headed the company.
A market that hit Torm with a large deficit of USD 24.5 million in the third quarter.
The market for oil product transport has improved in the past month and a half, and despite deficits in the two most recent quarters, Meldgaard's expectations for the market on the long term remain positive and intact, he tells ShippingWatch.
There's been a real step change. The market is improving compared to the third quarter, and we can already see it in our numbers"
JACOB MELDGAARD, EXECUTIVE DIRECTOR, TORM
"The spot market reacted more poorly in the second and third quarter than we imagined. But that doesn't change the long-term view that product tanker faces a recovery, and that the order book is under control. And with the implementation of the new sulfur regulations, the need for refined oil products will create a bigger need for transport," Meldgaard tells ShippingWatch.
In the past month, the rate level for Torm's bookings has increased 25 percent, compared to the third quarter. And the company's MR ships are currently sailing at spot rates of USD 15,000 per day on the Atlantic. In comparison, the ships sailed at spot rates of less than USD 10,000 in the third quarter.
"There's been a real step change. The market is improving compared to the third quarter, and we can already see it in our numbers."
Despite the improvement, it is still too early to say whether 2018 could end in a combined profit for Torm, says Meldgaard.
The reverse scenario
Shorter transport distances and cannibalization into the market from crude oil tankers, in particular, resulted in "historically low levels" for product tanker in the third quarter – a situation that also hurt competitors such as Scorpio Tankers and Ardmore.
Torm's bottom line deficit grew to USD 24.5 million before taxes from a deficit of USD 3.9 million in the same period last year. And after the first three quarters of 2018, the combined deficit stands at USD 32 million before taxes, following a profit in the first quarter countered by deficits in the two following quarters.
However, since Sept. 30, when the latest accounting period ended, the company has noted improvements in both parameters, explains Meldgaard. A stronger crude oil market also boosted the product tankers.