Although the first quarter is usually the seasonally weakest for Stolt-Nielsen, this time the company showed no signs of weakness and posted the strongest quarterly results since 2008 with Tank Containers leading the way. However, the war in Ukraine might disrupt the market and brings a lot of uncertainty. As for Odfjell talks, it was reiterated, that there is a need of consolidation in the chemical tanker industry to make it environmentally and economically sustainable.

Very solid margins resulted in the strongest first quarter since 2008

Stolt-Nielsen managed to again surprise us on a very strong figures reported this morning. Typically, the first quarter is the seasonally weakest for the company, but solid margins and record numbers from Tank Containers brought the quarterly results to the highest peak since 1Q08. Although shipment volumes were down, the margins were supported by securing the space on container ships and higher demurrage revenue. At Stolt Tankers firmer spot rates helped offset the higher bunker cost, while the Sea Farm had an unusually stable sales volumes and prices.

Ukraine brings uncertainty

It is still hard to speculate on the full impact of the war in Ukraine. Stolt-Nielsen pointed out the skyrocketing oil and gas prices, but also no further newbuild orders in the chemical tanker space and swing tonnage beginning to exit the chemical trade. The utilization rates in Terminals were guided to strengthen, shipments in Tank Containers to reduce, but still give a record year for STC. Sea Farm should not be impacted.

Speculation on a potential merger not denied

It was agreed in the report that such moves as breaching the 5% ownership line for Odfjell’s shares had to bring speculations of a potential merger between the two leaders of chemical shipping and, furthermore, the plans were not denied. The CEO of Stolt-Nielsen reiterated his beliefs that there is a need for consolidation in the chemical tanker industry to make it environmentally and economically sustainable.

Source: Norne Research