Product tanker freight rates should rebound in the second half of this year, Norden chief executive Jan Rindbo told Argus.
Norden posted its highest annual profits in 10 years last year, despite a fourth quarter loss on its tanker arm where Medium Range (MR) rates were under pressure since the middle of the year because of lower crude demand and oil product output.
There were sufficient amounts of clean products in 2020 to keep MR tankers occupied, but not enough to push rates back to 2019 levels, Rindbo said. And the recovery will probably be slow, he said.
"MR freight rates are at the bottom of the market for now, with a recovery probably starting from the second half of 2021," he said.
Norden said that as Covid-19 vaccinations continue to roll out, the global economy and oil demand will recover, as will clean products output.
Norden's dry bulk arm — which focuses on which focuses on Panamax, Supramax and Handysize vessels — had a much stronger start to 2021. Panamax freight rates have been very strong, thanks to a combination of minor bulk commodities like grains, soybeans and industrial metals driving the market, and a change in trade patterns that has created an imbalance between the Pacific and the Atlantic and resulted in shortages in vessel supply.
As China increased imports of grains from the US at the end of last year, a lot of vessels finished the laden leg of their voyage in the Pacific. This left a shortage of vessels in the Atlantic and meant shipowners could demand higher rates to ballast back.
But the recent spread between Capesize and Panamax dry bulkers is not usually sustainable for long periods of time and might revert, said Rindbo. Earnings per day typically increase with vessel size, but Panamaxes have earned significantly more than the much larger Capesizes on many routes in recent weeks, particularly because of that strong demand for grain shipments from the Atlantic to the Pacific.
Norden reduced its exposure to the tanker markets last year, and increased its position in dry bulk. The rebalancing mostly been completed when dry-bulk vessel prices were more favourable than they are now, although the company is keeping an eye open for more opportunities, especially in the dry bulk segment, given that asset prices are coming from "low levels", Rindbo said.
Norden is part of the Moller Maersk Center for zero-carbon shipping, which aims to speed the sector's move toward cleaner fuels, such as methanol, ammonia and hydrogen. Rindbo said that biofuels might be part of the solution, but that further research is required to determine the best option.
