CEO Anthony Gurnee stated on the company’s third-quarter earnings call on Nov. 2 that clean tanker owner and operator Ardmore Shipping anticipates an increase in worldwide product tanker ton-mile demand of 7%-8% as a result of the EU oil embargo of Russian products.
Shifting geopolitics
We anticipate that the Russian oil embargo will continue to tighten the market into 2023, or essentially until geopolitical conditions shift, Gurnee added.
However, S&P Global Commodity Insights’ European Oil Market Forecast predicted that total Q4 refined product demand in Europe will be lower than Q4 2019 levels as a result of families’ reduced spending throughout the winter due to high food and energy prices.
The spot market time charter equivalent, or TCE, earnings for Ardmore’s Medium Range Eco-design tankers at about $47,000 per day helped the company achieve record-high earnings for the third quarter of 2022 of $61.6 million in adjusted earnings. A robust fourth quarter of the 2022 fiscal year is anticipated, according to the firm, since 40% of Ardmore’s MR Eco-design fleet ship-days have already been reserved at a day rate of $45,000.
Volatility continues into Q4 2022
In its financial presentation, Ardmore claimed that Europe must replace 1 million b/d of imports of refined products from Russia, mainly naphtha and diesel, before February 5, when the Russian price restriction on refined products is anticipated to take effect. Despite the G7 nations’ agreement, Ardmore anticipated that the product tanker market would remain volatile.
Notably, according to data from S&P Global Commodity Insights, freight for the 38,000 mt US Gulf Coast-UK Continent route fluctuated approximately $45/mt in Q3, reaching a high of $77.08/mt on August 2 and a low of $26.98/mt on August 16. The trans-Atlantic route continued to see volatility, with an average daily change in freight seen during the quarter at $3.90/mt, up 7% from the $3.65/mt daily average change experienced in Q2 and 86% higher than the average daily change of 52 cents/mt in Q3 2019.
For the 38,000 mt USGC-UKC route, average daily changes in freight were rough $1.56/mt thus far in Q4 2022.
Spot TCEs, time-chartered vessels boost earnings
Average earnings for Ardmore Shipping’s MR ECO-designed tankers were $47,050/d in the third quarter, up 53% over the previous quarter. By November 2, Ardmore had scheduled over 40% of its fourth-quarter MR revenue days at an average TCE of about $45,000 per day in the MR ECO-design sector. The average TCE rate for the company’s MR tankers was $42,835 per day in Q3, with around 40% of the total MR revenue days for Q4 fixed at $43,000 per day.
The business reported a reduction in their vessel operating expenses and time charter-in levels of about $13,000/d after having sold and time-chartered back their older Ardmore Sea leader, Sealancer, and Sealifter tankers.
Including five chartered-in vessels, Ardmore currently operates 27 medium-range tankers, with 21 MR tankers weighing between 45,000 and 49,999 dwt and six Eco-Design IMO 2 product/chemical tankers weighing between 25,000 and 37,800 dwt. Since March 1, 2021, the firm has also been operating three of Carl Büttner’s 24,000 dwt chemical tankers.
Did you subscribe to our newsletter?
It’s free! Click here to subscribe!
Source: S&P Global
