Nordic American May Double Oil-Tanker Fleet as Asia Spurs Demand
Stock Chart for Nordic American Tankers Ltd (NAT)
Nordic American Tankers Ltd., the third-largest owner of oil tankers hauling 1 million-barrel cargoes, said it may double its fleet within half a decade, betting rising Asian energy demand will snap a rout in rates.
The Hamilton, Bermuda-based ship owner may expand its Suezmax fleet to 40 from 20 now, Chief Executive Officer Herbjorn Hansson said in a phone interview today. The tankers are the largest to pass fully loaded through the Suez Canal.
Daily earnings for Suezmaxes are the lowest for the time of year in at least a decade, according to data from Clarkson Plc, the world’s largest shipbroker. Periods of low rates are the best times to buy ships, and Nordic American will benefit quickly as the market rallies because its vessels all compete in the spot for spot cargoes, Hansson said. Demand to ship oil will recover as expanding consumption in Asia offsets declining imports to the U.S., he said.
“The increase in transportation work to the Far East outweighs the reduction in imports to America,” Hansson said. “Of course I can’t promise, but expansion is an inherent feature of a sound business.”
Nordic American will pay a dividend for the fourth-quarter of 16 cents per share, the 62nd consecutive payout since the company began in 1997, it said in a statement today. The company lost 39 cents per share last quarter, compared with 37 cents a year earlier. The company’s shares traded in New York gained 0.3 percent to $8.78 this year.
Rates rose to a record in 2008, driving the outstanding order book for new vessels to its highest since at least 2005, according to data compiled by Bloomberg from Clarkson and IHS Inc., an Englewood, Colorado-based researcher. The global economy had its worst recession since World War II in 2009. The fleet will swell 5.6 percent this year as demand gains 5.2 percent, Clarkson predicts.
U.S. crude-oil imports averaged 8.65 million barrels a day in 2012, the lowest since 1999, as domestic output expanded, Energy Department data show. Chinese oil demand will advance 4 percent this year to 9.98 million barrels a day, the International Energy Agency estimates.
That’s increasing demand for Suezmaxes by lengthening voyages, Hansson said. The ships are bringing cargoes from the Mediterranean and West Africa, he said.
“That is always the difficulty in our business, to see how trade flows are developing,” he said. “Globalization has dragged hundreds of millions out of poverty, and this process continues.”
A five-year-old Suezmax costs $43 million, the lowest since 2003, according to Simpson, Spence & Young Ltd., the world’s second-largest shipbroker. The largest owners are Teekay Corp. and closely-held Dynacom Tankers Management Ltd., according to Clarkson data.
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