We expect Q4’19 EBITDA of SEK 130m

Crude tanker rate spike should support product rates

Increase in 2020e driven by Suezmax rates

We expect Q4’19 EBITDA of SEK 130m
Crude tankers spiked to all-time high levels during Q4’19, with Suezmax rates reaching USD 160kpd for Suezmax vessels. While few fixtures were concluded at this level, Suezmax rates in Q4’19 have averaged ~USD 73kpd (up 339% q-o-q and 95% y-o-y), well above the CBE of ~USD 25kpd. MR tankers, while having a smaller upswing, were strong at ~USD 20kpd per day (up 99% q-o-q and up 84% y-o-y), above their CBE of ~USD 17kpd. In our estimates, we have increased our expected CCOR Suezmax tanker Q4’19 realised rates to USD 43kpd (USD 40kpd) while keeping product tanker rates at USD 19kpd. CCOR rates are not adjusted to the reported market rates due to our taking bookings guidance into consideration and the one-off rate spike not being realised.

Upward revision to 2020 estimates
Strong underlying tanker fundamentals together with additional catalytical factors such as the US sanctioning COSCO vessels have helped to keep Suezmax and product tankers at ~USD 70kpd and ~USD 20kpd, respectively. Variations, predominantly to the upside, have also been observed. As such, we increase our 2020 rate estimates for CCOR to ~USD 45kpd (USD 31kpd) for Suezmax tankers while maintaining our ~USD 22pd estimate for the product tankers.

IMO2020 should spur additional product trading
With the IMO2020 regulation increasing demand for compliant fuels such as VLSFO and MGO, we expect refineries to increase their runs to help match demand, which should also boost demand for blending components. This will add to tonnes transported and help support product tanker rates. Moreover, excess refinery production in China driven by new refineries ramping up has resulted in a 50% hike in product export quotas, which should increase seaborne volumes and further support product tanker demand.

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