Golden Stena Weco eyes expansion in chem-tank trades

Singapore-based player sees opportunities to acquire tonnage if sluggish freight market and vessel oversupply persist

Eyebrows were raised when Golden Stena Weco managing director Bjorn Stignor told Trade­Winds that his company might consider buying more chemical tankers.

Only moments before, he had explained that the company recently scaled back its fleet from 20 to 14 ships, blaming the dire state of the Asian chemical tanker markets.

“There are too many ships in the market. Another 60 to 70 stainless-steel vessels will join the fleet in the next year, which won’t help much either,” he complained.

But then Stignor explains his fleet-expansion rationale. “I think S&P [sale-and-purchase] will become very interesting if the freight market remains sluggish over the next year or two. That would be a good time for us to make an asset play.”

Golden Stena Weco was formed five years ago when Stena Weco formed a joint venture with Singapore-listed palm-oil producer Golden Agri-Resources, which was looking to team up with a shipping partner to gain better control over its supply chain.

It took delivery of a core fleet of seven owned coated chemical tanker newbuildings, of which two are of 9,600 dwt and five of 17,500 dwt, which remain in the fleet. The rest of the fleet comprised vessels on long-term charters to maintain flexibility.

This strategy paid off when rates fell late last year after too many ships entered the market.

Brokers tell TradeWinds that the Asian chemical tanker trade always takes the first overcapacity hit. “The region is the first stop for newbuildings coming out of the yards,” one broker told Trade­Winds.

Today it is more cost-effective for Golden Stena Weco to fix ships on spot rather than period.

The company’s chartering manager Jacob Enersen reveals it is fixing 30 to 35 spot cargoes every month.

Enersen notes that stainless-steel chemical tankers are increasingly competing with coated chemical tankers for whatever cargoes they can get.

“Stainless-steel ships usually command higher rates, so they don’t usually compete with coated tankers. That they are doing so just shows you how bad the stainless-steel market is right now,” he said.

Four months ago, Golden Stena Weco opened an office in Dubai, its first satellite chartering-office outside Singapore. This was done as a joint partnership with Stena Weco, and it currently has a team of four.

Their task is to arrange backhaul cargoes for Golden Stena Weco’s tankers bringing palm oil cargoes from Southeast Asia to the west coast of India and the Middle East.

“We take a lot of palm oil there, so when the ships become open we like to carry chemicals and clean petrochemicals back to Asia,” Stignor explained.

“The Middle East has become such a big market for us; we thought we should have a presence there. The Dubai office has been very busy since day one, and we are very happy with that.

With a large palm oil producer as one of its main shareholders, the commodity is one of Golden Stena Weco’s main cargoes and currently comprises about 30% of its annual cargo volume.

Maintaining this percentage is becoming tougher. While demand for palm oil remains strong, supply has become sluggish.

“The palm oil industry is still recovering from the effects of El Nino and fires from a couple of years ago. Stock levels are low in Indonesia and Malaysia,” Stignor said.