Products tanker markets have hit rock bottom and are set for a rebound – just not for a while, according to Torm.
A relatively “controlled” global tanker orderbook coupled with positive long-term market fundamentals will see products tanker markets pull through in much the same way as the container shipping industry did this year, the Dane’s chief executive said.
Hellerup-based Torm on Thursday revealed a $26.5m net loss for the fourth quarter having previously warned of a possible $85m full-year deficit as freight rates continued to bite hard.
Although terming the result “not satisfactory”, CEO Jacob Meldgaard is not unduly concerned about prospects for the company which is one of the world’s largest products tanker outfits.
“Like any product tanker company we are suffering with a weak market,” Meldgaard said in a telephone interview with TradeWinds on Thursday.
“The whole industry is suffering from a downturn at this moment. We had seen signs of a recovery in the summer months, but that did not happen.”
This false dawn eventually led Torm to alter its full-year net loss forecast from between $40m and $60m to between $75m and $85m. This would appear to point to the owner bracing itself for a particularly frosty fourth quarter, but Meldgaard does not see things getting any worse this year.
“We are not expecting that we will have a further weakening in the fourth quarter. The rate environment now is in line with what we saw at that time [of the loss forecast revision].”
Rates were already severely depressed heading into the final period, but the Torm boss vowed: “We will see a recovery in the tanker market”.
He continued: “I can’t dictate the rates in the market place. We are not in control over these developments.
“We are at the bottom of the cycle; demand is under control. The products tanker market is positive [in the long term], we are very confident about that.”
Meldgaard pointed to the global products tanker orderbook which he said is “now relatively under control”. A glut of newbuilding deliveries in 2009 and this year have led to an over-supply situation which has hammered rates. But the deliveries scenario in the coming years is much different and will buoy rates once again, he argued.
“In the same way that the shipping industry is cyclical, the tanker market is cyclical,” he said pointing to likely long-haul demand for tanker cargoes out of the Middle East to Asia and the US as positive factors going forward.
“Only 12 months ago may were discussing whether players in the container market could survive or not. But that is history now.”
Asked if the current downturn was severe enough to tip the company over the edge, Meldgaard shot back: “We are very driven. We will absolutely survive this. We have been here for more than 100 years.”
