Nordic American Tankers talks up outlook
NORDIC American Tanker Shipping, the owner of 13 suezmax vessels, said spot rates for its fleet have averaged $40,000 a day in the first quarter.
Nordic American also signalled in a letter to shareholders that the company “is ready for expansion when the time is right”. The average rate, which is so far the same as the company’s fourth-quarter average, compares with
”less than $10,000 per day” that the company said it needed to break even. “In short, the company is in a very good position,” New York Stock Exchange-listed Nordic American said. The company declined to forecast the direction of suezmax spot rates, which had fallen recently.
Eleven of the company’s13 suezmax tankers operated on the spot market, company presentations reveal. Suezmax rates on the major trading route from West Africa to the US Gulf have risen by nearly $10,000 per day in the last week, to hit $42,000 per day, according got the Baltic Exchange. The Baltic Exchange’s TD6 route, from Novorossiysk in Russia to Augusta, Italy, has risen to nearly $35,000 per day, up from seven-year lows of around $20,000 per day seen during mid-February on this route. This compared to W419, or over $210,000 per day on July 23, 2008 last year. Norwegian broker Fearnleys said that the Mediterranean and Black Sea market had “remained soft and essentially unchanged from [the previous] week’s already low levels”. Brokers said production cuts could make it difficult for Nordic American to maintain such high profitability. The market “has been going down and it’s going to keep going down”, said one broker who declined to be identified. He cited oversupply and a decline in demand amid the economic downturn as further problems facing tanker owners. The Bermuda-based company has no net debt and a credit line of $500m, which offers the company financial flexibility. The business has a market value of about $866m. Nordic American’s fleet includes the 2003-built, 159,999 dwt Nordic Moon and the 1998-built, 159,999 dwt Nordic Saturn. Nordic American has paid a dividend for the past 46 consecutive quarters since the autumn of 1997 when the first three vessels were delivered to the company. The company said it expected to continue to pay a dividend as long as rates remained higher than break-even. Nordic American could not be reached by Lloyd’s List for comment.
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