Gothenburg: The product tanker market is becoming ever more “fragile”, says one of the sector’s leading players. Kim Ullman, ceo of the Swedish firm that is controlled by the Stena Group, says that for pure products the picture is “still positive, but more and more fragile.”
“Demand growth is there and distances are increasing but the influx of supply makes it fragile,” he says, predicting equilibrium at best for the coming 12 months.
“Influx is a given, but demand is not,” Ullman points out, adding: “We need every percentage we can scramble.”
Part of the problem for product tankers is that they became a solid bet for many, and now too many have been ordered.
“Everybody builds on relatively well-founded expectations,” Ullman says, “but when everybody does it the expectations go away.”
As for chemical tankers, this, he says, is a “very interesting” market, hence the company’s IMO2 investments. In the coming months Concordia will take delivery of a pair of self-designed chemical tankers from Guangzhou Shipyard International. A big part of that investment is towards the vegetable and palm oil business in Southeast Asia.
Currently Concordia has 10 product carriers trading plus one suezmax which is in a pool with Sonangol. Ullman says there are no plans to order any more ships at present.
In amongst the product and chemical tankers, the suezmax stands out as the “joker”, Ullman says, while noting that it is appreciating in value and earnings.
In terms of how the ships are deployed, that has changed a fair bit of late.
A few years ago Concordia had everything on time charter at good rates signed in 2005 to 2008 which carried the firm profitably over the slump years through to 2013.
Now all ships are on the spot market as the time charter market is not good enough, Ullman says, while adding: “We believe in gradually improving markets.” [14/08/14]