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Odfjell pens order for four chemical tankers for $240m at Chinese yard

Odfjell pens order for four chemical tankers for $240m at Chinese yard
Odfjell has penned a letter of intent valued at $240m to build four stainless chemical tankers at a state-owned Chinese shipyard, with the final contract expected to be signed in the second half this year.

The shipowner said renewal of its core chemical tankers is needed so as to ensure its continued long term comeptitiveness. The newbuilding programme is initiated at a time when Odfjell believes yard prices are favourable and sees improved financials.

The Oslo-listed shipowner made a $40m profit in the first half ended 30 June 2016, as against the loss of $25m in the year-ago period.

“Our markets are currently challenging, but we are pleased to see that the increased competitiveness of Odfjell means that we continue to generate positive results,” said Kristian Morch, ceo of Odfjell.

“The chemical tanker spot market was softer this quarter, however, utilization remained high due to stable contract nominations and agility in the spot market,” he commented.

The company’s forecast for the third quarter is a slightly weaker time-charter results as the markets are generally softer.

It added that the long term balance between supply/demand in the chemical tanker market remains favourable, but the supply of ships is increasing mainly due to the poor CPP (clean petroleum products) market freeing up swing tonnage.

For Odfjell’s gas carrier business, it has cancelled the two first 17,000 cu m LPG/ethylene carriers on order due to delayed construction, and all paid instalments have been returned by the guarantor. The shipbuilder, Nantong Sinopacific Offshore & Engineering, is crumpling under mounting debts and a dearth of new orders.

Odfjell has a further six gas carriers – two 17,000 cu m and four 22,000 cu m in capacity – ordered at the Chinese yard. Odfjell said it will most likely cancel the remaining orders when it is in a “cancelling position.”