Nordic American Tankers Ltd., the third-largest owner of ships hauling 1 million-barrel cargoes of oil, 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 market 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. Nordic American lost 39 cents per share last quarter excluding an impairment charge, compared with 37 cents a year earlier. The company’s shares traded in New York are little changed this year at $8.76.
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.
Rates on the benchmark voyage to the U.S. East Coast from West Africa fell for a seventh session, losing 0.8 percent to 52.14 industry-standard Worldscale points today, according to the Baltic Exchange, the London-based publisher of shipping costs. That’s down 21 percent since the start of the year.
Rates for very large crude carriers that hold twice as much cargo on the busiest trade route to Asia from the Middle East rose for the first time in a week, the bourse’s figures showed today. Charter costs gained 0.3 percent to 31.29 Worldscale points, according to the exchange. The vessels’ daily loss on the voyage widened to $7,038 from $6,761 on Feb. 8.