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Euronav expects multi-year upcycle for large tankers

Euronav Euronav Cap Philippe
Tanker giant Euronav announced a strong set of quarterly results and has a positive outlook for the large tanker market based on "strong fundamentals".

Euronav reported a $16.4m profit for the third quarter 2022, up from a $105.9m loss in the same period last year. Year-to-date the company has made a $31.8m loss, compared to a $266.6m loss at the same point in 2021.

Average spot rates in the third quarter 2022 were $22,250 per day for VLCCs, more than double the $9,000 per day average earned in Q3 2021. Average time charter rates slipped from $50,250 per day in Q3 2021 to $47,000 per day in Q3 22.

Suezmax spot rates more than tripled to $34,000 per day from $10,250 per day in Q3 21. Time charter rates ticked up $1,000 per day on-year to $30,500 per day.

In a busy quarter, the tanker owner sold another older suezmax for a capital gain of $12.9m and ULCC Europe for a capital gain of $34.7m. Two new suezmaxes were ordered at Daehan Shipbuilding and are scheduled for delivery for Q3 2024.

Euronav’s merger with Frontline is still underway, with a series of steps including the relocation of Frontline necessary before the deal can be carried out.

In its assessment of the market and outlook, Euronav said the sector was positioned for a multi-year upcycle as the orderbook is low and fresh orders are constrained by limited yard capacity and high newbuild prices.

Euronav forecast further market disruption from the war in Ukraine. EU regulations set to enter into for in early December will displace more Russian crude volumes which are likely to go to destinations in Asia, boosting tonne-mile demand.

Further support is expected from upcoming IMO regulations CII and EEXI, which will absorb capacity by slowing the global fleet.

“Other data points continue to support a positive tanker market narrative. US crude exports for the week ending 20 October hit a new record high of 5.1m bpd reflecting some SPR cargoes but also underlying strong US production growth,” said Euronav.

Hugo De Stoop, CEO of Euronav said: “We believe that potential headwinds from OPEC production cuts will not translate into factors capable of disrupting the current momentum. The proposed combination with Frontline remains on track and we look forward to delivering a scalable and influential crude tanker platform.”