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Bucked bulk trends boost Norden Q1 profit

Norden Norden Gabon operation
The absence of the usual Q1 low in dry bulk markets helped Norden to a $117.1m profit for the quarter, up from a $14.9m loss in Q1 2021.

Norden noted a drop in average spot rates for the quarter compared to Q4 2021, but given that the first quarter is generally the weakest, rates reflected a very strong market.

“Rates continue to be supported by market inefficiencies including historically high congestion levels. The war in Ukraine and sanctions on Russia created longer voyage distances, although commodity volumes are not easily replaced. In contrast to normal patterns, Pacific rates were stronger than Atlantic rates, creating opportunities for regional arbitrage,” Norden said in its earnings report.

In the longer term, Norden expects the war in Ukraine to have a slight net negative impact on the dry bulk market as loss of volumes outweigh the increase in distances travelled. Forecast improvements to global supply chain congestion are also expected to weaken the market over time.

The tanker market was less buoyant for most of the first quarter with some signs of improvement towards Q2.

“Q2 rates for especially MR vessels started strong. Based on a tight oil market, volatility in product tanker rates is expected to remain high across regions, with global stock levels nearing historically low levels. Particularly the Ukraine-Russia war and sanctions against Russia are altering trading patterns, creating strong MR demand. The strong product tanker rates are expected to continue in coming quarters,” said Norden.

The company reiterated its guidance of $270m - $350m profit for the 2022, front-loaded in the early part of the year.

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