Croatia's Tankerska Next Generation (TNG) has turned a profit thanks to a tanker rebound in the fourth quarter, but said 2020 is presenting a whole new range of challenges.
The MR specialist logged net earnings of $900,000 to 31 December, from a loss of $1.64m in 2018. Revenue sank from $11.88m to $9.95m.
Total costs were cut to $970,000 against $3.54m as it operated four of its six tankers on time charters.
"The tanker markets managed to make an outstanding comeback in the fourth quarter," said chief executive John Karavanic.
The market conditions allowed it to "retreat back to fundamentals," the company added, focusing efforts on balancing spot and period cover, but prioritising the latter.
Its profit was due to well-timed time charter executions and a strong spot market towards the end of the year, it said.
Karavanic added: "So just about when the owners got comfortable in their driving position towards the final days of 2019, 2020 has brought us new concerns."
Facing a new reality
With the Covid-19 coronavirus outbreak hitting Asia and beyond, he said the company is f"acing a new reality, somewhat different to what the market has long expected".
He said: "Stringently scheduled ship repairs and modifications in 2019 are not flourishing as expected and while shipyards try to do their best, delays at present are heavily impacting market fundamentals, ballast water treatment system installations and scrubber economics."
Karavanic said that it is evident the crisis will hamper Chinese growth in the first quarter of 2020, potentially taking a toll on annual GDP growth too.
The company believes demand for tanker floating storage, due to inaccessible ports, might increase with a rising contango market, when future prices outstrip spot levels.
"The evident slowdown in consumption will not necessarily be offset once the virus has been put under control but the Chinese economic titan is bound to be resuscitated soon after, which might be complimentary to shipping," the CEO said.
"The virus illustrates just how dependent the world has become upon China with many supply chains deeply embedded into the country."
New charters revealed
The company announced it had signed up one of its six ships, an ice-class product tanker, for two years from march.
It is not naming the vessel or the "prominent" charterer involved, but it has achieved a rate of $15,250 per day.
There is an option to extend the deal for a third year at $15,750.
An eco-MR meanwhile has been chartered out for a further three to six months at $16,850 per day.
"We consider the fleet well covered with period business, more so than in the last few years," it said.
Buyback launched
TNG also said it will buy back up to 110,000 of its own shares up to a value of $725,000.
The move is aimed at enhancing the value and boosting the liquidity of the company's shares.
The shares will be repurchased on the Zagreb bourse.
TNG is majority-owned by Zadar-based Tankerska Plovidba.
