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Frontline eyes opportunities in weak tanker market

Frontline eyes opportunities in weak tanker market
John Fredriksen’s flagship tanker firm Frontline expects to see attractive M&A prospects in the second half the year on the back of weaker markets.

In the company’s second quarter results Frontline ceo Robert Hvide Macleod noted that the coming quarters would present many challenges with increasing supply but was confident the company would be able to continue to execute on its strategy.

“Given how both the ship values and spot market conditions have developed over the summer, we believe we are better positioned having not done any substantial acquisitions in the first half of the year. We expect attractive opportunities to emerge as a result of the weak market and will remain opportunistic going forward,” Macleod said.

Frontline is keen to be a player in the consolidation of the large tanker market and the first half of the year bid unsuccessfully to takeover rival DHT Holdings in an all share deal.

Looking into 2018 Frontline believes the market will begin to improve as the pace of new deliveries slows and older vessels are scrapped, with the issue for the present market tonnage oversupply rather than a lack of demand growth.

“We believe that increased scrapping is inevitable in the near term, driven by the weak spot market and the increased scrap value of tankers, which is up by approximately 50 percent year on year,” the company said.

Frontline reported a second quarter net loss of $19.4m compared to a profit $27m in the first quarter of 2017.

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