Capital Products Q4 profit rises 12%

Refined product and crude tanker demand offsets weaker boxship markets.

Capital Product Partners saw fourth-quarter and full-year 2015 net income rise thanks to the strength in the tanker markets.

Net income for the fourth-quarter was 12% higher at $15.3m while full-year net income came in 26% higher at $55.4m. However, quarterly earnings per share of $0.11 missed analysts estimates by a penny.

The Evangelos Marinakis-backed company said the product tanker market saw “solid rates” in the just completed quarter, albeit down from the third quarter. It said medium-range (MR) tanker time-charter rates were close to seven-year highs and activity in the period market was firm.

Both the West and East-of-Suez markets were impacted by seasonal refinery maintenance and a lack of product arbitrage in the Atlantic basin. But refinery utilisation rose through the quarter as did naphtha flows to the Far East, resulting in firmer rates. Western markets were also helped by transit delays on the Panama Canal.

The company said the orderbook for MR tankers increased during the fourth quarter but still remained relatively low. There was also some slippage of 2015 deliveries with about one-third of expected MR and handysize tankers not delivered on time. It expects net product tanker fleet growth of 4.6% this year compared to demand growth of 3.6%.

Suezmax tankers also saw good demand with fourth-quarter spot rates at their highest since 2008. Capital Product said China’s demand to fill its strategic oil reserve drove rates. It also said supply was impacted by increased delays in the Turkish Straits and high chartering volumes that increased waiting times at ports in the East.

The suezmax orderbook stood at 21% of the current fleet, while 2015 order slippage was 38% of expected deliveries. However, expectations of continued European and Indian demand for Middle Eastern crude is expected to keep supply tight. The company expects deadweight demand is set to expand 3% against supply growth of 4.4% this year.

Post-panamax container vessels saw weaker demand due to fewer bookings on the Far East-Europe route, and post-Christmas seasonal weakness. It said China’s economic slowdown also caused volumes to shrink year-on-year on various trade routes.

Overall, it expects container volume demand of 4% during this year with new vessel supply also standing at 4%. The orderbook on new containerships stood at 19% of the current fleet, the lowest since 2003.