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Nanjing Tanker books provisions of $756m for 19 VLCCs

Nanjing Tanker books provisions of $756m for 19 VLCCs
Financially-weakened Nanjing Tanker Corporation (NJTC) has booked provisions in financial year 2013 amounting to RMB4.62bn ($755.96m) for 19 VLCCs due to the weak oil tanker shipping market.

The Shanghai-listed tanker shipowner said it will have liabilities of RMB2.1bn for 10 chartered-in VLCCs and impairment of assets of RMB2.52bn for nine owned VLCCs.

On the chartered crude tankers, NJTC said it has agreed with the owners to continue the 10-12 years charter, even though spot rates are currently way below the rates that NJTC had agreed to pay.

“Due to consecutive losses, we have met the accounting criteria to record provisions for losses (for the 10 VLCCs),” NJTC, subsidiary of China's state-owned Sinotrans & CSC Holdings, said in a regulatory filing.

NJTC also announced that the asset values of the nine owned VLCCs have fallen since 2012 and chances of seeing the values recover are slim.

“Since 2009, the global tanker shipping market, particularly crude tankers, has been sluggish and freight rates have stayed below the industry's average breakeven level. The asset values of large crude tankers have also plunged sharply since 2012,” it said.

NJTC had earlier predicted an annual loss of RMB1.27bn in 2013, widening from a deficit of RMB1.24bn in 2012. It has recorded a loss of RMB989m in the first three quarters of last year.

NJTC will delist from the Shanghai Stock Exchange after it releases its 2013 annual report in April, after four years of consecutive losses. Its shares have been suspended from trading since May 2013.

TAGS: Tankers