Posted On: 10-11-2020
Belgium’s tanker shipping company Euronav has decided to bring forward dry dockings in order to counter the challenging freight rate market in the short term. As informed, a total of nine vessels are planned to enter a dry dock. “This flexibility allows 15% of Euronav’s fleet to execute its regulatory dry dock requirement during a depressed market whilst also providing the potential benefit of an improved freight rate market in the future,” the company explained. Since the middle of Q3, freight rates remained under rising pressure. This is due to the continued uncertainty over crude oil demand recovery as COVID-19 restrictions remained in place. Another factor is limited supply and visibility of cargoes given high compliance within OPEC+ on production costs. Freight rates are under pressure also because of the increasing supply of available VLCC and Suezmax tankers. These factors are unlikely to alleviate significantly in the short term, Euronav believes. On the other hand, a specific bright spot in the short term is the recovery in VLCC scrap prices since May, rising 18%, as steel prices have gained momentum. This indicates a potentially more buoyant backdrop for the recycling market into 2021, the company said. “A growing divide between rising short-term fleet supply and limited cargo availability, restricted by OPEC+ production cuts and a slower demand recovery for crude, has impacted the sector negatively and is likely to continue throughout the seasonal winter period,” Hugo De Stoop, CEO of Euronav, commented. “With our sector low leverage, supported by over USD 1 billion liquidity, Euronav is well positioned to navigate these challenges and potentially seize value creative opportunities should they arise.” The dry docking decision was unveiled in the company’s financial report for the third quarter of 2020 showing that Euronav posted a net income of $46.2 million, compared to a net loss of $22.9 million seen in the corresponding period a year earlier. EBITDA for Q3 2020 stood at $151.8 million, compared to $96.8 million recorded in Q3 2019.