ODFJELL, a chemical tankers and terminals owner and operator, said profit more than tripled on strong demand.

The Norwegian company reported a net profit of $50m in the fourth quarter of last year, compared with $15.4m in the same period a year earlier, according to a statement. It approved a dividend of $0.61 per share based on its adjusted results in the second half of 2022.

“The report shows a chemical tanker market that remained at strong levels in the quarter, concluding a financially strong year for Odfjell,” it said.

The achieved time charter equivalent rate was $31,733 per day in the last three months of the year. That compares with a cash breakeven level of $23,822 per day.

Odfjell refinanced five vessels at “attractive terms” during the last quarter, reducing breakeven by about $3,100 per day. It took delivery of one time charter vessel in the reporting period, with six more of these 25,000 dwt stainless steel vessels to be delivered up until 2025.

It said that a somewhat slow start in the spot market, countered by improved terms in its COAs, should translate into time-charter equivalent earnings in the first quarter of this year in line or slightly below the fourth quarter. 

Rates on COAs are up about 26% on average, it said, adding that charterers interest in the contracts remain high while available space is limited. That has led the company to experience “promising” negotiations both on rates and contract terms.

“A substantial number of our contracts are subject for full renegotiation in 2023 and present market momentum is expected to favour our position,” it said.

Chemical tanker rates remained strong across all major trade routes in the fourth quarter, with swing tonnage low because of high margins in the clean petroleum products trades, which tightened the supply of ships.

Demand has meanwhile remained at healthy levels, supported by increased volumes of products being transported over longer distances, the company said.

Despite lower chemicals production in 2022 on the back of destocking, high costs, and lower downstream demand, Odfjell said that the chemical tanker market has historically been resilient to macroeconomic contractions, which will also play out in this cycle.

While the shortfall is unlikely to bounce back within the short term, a few factors may positively impact the market outlook for the quarters to come, it said.

China’s economy shows some signs of improvement which again may boost demand for chemical imports, and the signals from Malaysia and Indonesia to halt vegetable oil exports to Europe may cause further trade disruptions and encourage trades to and from alternative markets, while the European Union ban on Russian refined products is expected to encourage swing tonnage to remain in the CPP trades.

On the supply side, there are few vessels on order and limited capacity for new orders amid high prices.

The company’s product mix has remained relatively stable, with about 80% chemicals, 7%-10% CPP and 3%-4% vegetable oils.

Odfjell has made significant investments in energy-saving technology and energy efficient operations, and as such does not expect any speed reductions in its fleet because of the International Maritime Organization’s new regulations that took effect on January 1.

It expects commercial occupancy rates in its tank terminals business to remain resilient this year, though activity levels may be curtailed due to the continued uncertainty introduced by macroeconomic and geopolitical risk factors.