As of 29 May 2024, the Drewry Crude Tanker Equity Index and the Drewry Product Tanker Equity Index saw substantial YTD gains of 21.7% and 31.5% respectively outperforming the S&P 500’s 10.4% rise over the same period. This difference primarily highlights the recent upswing in sectoral indices. In May alone, the crude and product tanker equity indices surged 11.1% and 12% respectively mainly driven by higher freight rates for mid-sized tankers and product carriers, much higher than the 2.9% rise in S&P 500. All stocks except Nordic American Tankers (-1.8%) in Crude Tanker Index gained in May with Teekay Tankers (+ 26.2%) being the leading performer. In Product Tanker Equity Index all stocks surged with Ardmore Shipping being the top performer (+32.8%).
Looking at the individual constituents of the product tanker equity index, in 1Q24, revenues of Ardmore Shipping declined. Its TCE revenue fell 7.2% YoY to USD 75.8mn and its EBITDA decreased 10.4% YoY to USD 49.3mn. On the contrary Scorpio Tankers saw a 3.3% YoY increase in TCE revenue to USD 389.8mn, while its EBITDA went up 4.1% YoY to USD 292.9mn.
In 1Q24, crude tanker companies under our coverage reported mixed results. Companies with higher Suezmax exposure, like Teekay Tankers, Euronav and Nordic American Tankers (NAT), saw revenue decline due to lower charter rates in 1Q24 amid seasonal refinery outages in Europe. While Teekay Tankers’ TCE revenues and EBITDA dropped 18% YoY to USD 221.8mn and 21% YoY to USD 162.6mn, respectively, Euronav’s TCE revenues fell 31.9% YoY to USD 211.1mn and its EBITDA decreased 39.7% YoY to USD 142.6mn. NAT saw a decline of 30.5% YoY to USD 60.6mn in TCE revenues and a plunge of 44.8% YoY to USD 37.2mn in EBITDA. Conversely, DHT Holdings and Frontline, with larger VLCC fleets, benefited from rising VLCC rates amid tight tonnage and reported revenue and profit growth. DHT’s TCE revenue rose 13.2% YoY to USD 106.3mn, with EBITDA increasing 16.3% YoY to USD 83.7mn and Frontline witnessed a growth of 17.3% YoY to USD 414mn in TCE revenue and 14.5% YoY to USD 339.3mn growth in its EBITDA.
In April, spot TCE rates of crude tankers surged 12.5% MoM on average because of increased freight rates of mid-sized tankers. An anticipated shift in crude trade patterns because of the expansion in refinery capacity in key oil-producing countries and the start of the TMX pipeline will primarily benefit mid-sized tankers, suggesting an improved QoQ performance in 2Q24. Conversely, product tanker rates declined 16.1% MoM on average in April attributable to ample available tonnage. Rates plunged 28.1% MoM on Middle East-Japan followed by 20.2% MoM and 19.3% MoM% on the Atlantic and Pacific routes respectively.
The second-hand value of a 5-year-old VLCC surged 8.1% YTD (ending April) to USD 113.3mn followed by Suezmax and Aframax which increased 6.4% YTD to USD 83mn and 2.1% YTD to USD 72mn respectively. Additionally, the value of newbuild resale Suezmax vessels was at an average premium of USD 12mn over the new build prices. On average, the second-hand value of product tankers surged 3.3% YTD with MR prices increasing 4.6% YTD to USD 45.5mn and LR1 going up 3.9% YTD to USD 53mn. This trend of elevated second-hand prices is expected to continue until 2025 due to tight tonnage and higher freight rates.
The average new build prices for crude tankers surged 2.7% YTD (ending April), while prices for product tankers increased 4% YTD. This upward trend is expected to continue due to rising shipbuilding costs, inflation, and higher capacity utilisation at shipyards.
Source: Drewry Maritime Financial Research