Norden Hires Two More MRs

Danish shipping company Dampskibsselskabet Norden A/S has entered into an agreement on long-term chartering of two new Medium Range (MR) tankers scheduled for delivery in 2018.

The new additions will be a supplement to four other MR vessels, which the company ordered, and which are slated for delivery during the coming 18 months, the company’s Chairman Klaus Nyborg said.

The decision to move ahead with the deal was prompted by the attractive prices as the end of 2016, the price of renting vessels had dropped “to a point where it once again was attractive to increase our capacity, we took advantage of it,” Nyborg added.

The company has the option to extend the charter period for all six ships, and is also given purchase options at a price agreed upon in advance.

Speaking of the prospects for this year, Norden’s Chairman said that the company entered 2017 with 21% fewer open ship days than the year before, and “despite the current spring feeling in the market, we believe that to be quite sensible.”

“Many new tanker vessels have been delivered and this is expected to put a damper on the market in 2017. There is, however, a possibility for improvement towards the end of the year – i.e. at the same time as new vessels are delivered to Norden,” he commented.

With respect to the outlook for dry bulkers, Nyborg noted that the worst wave of deliveries should be over, which should contribute to continued gradual market improvement.

The company entered the year with 84% coverage and expects a dry cargo market which, due to higher Chinese imports, will offer average rates slightly above the level seen in 2016. As a result, Norden’s adjusted results for the year are to range between USD -15 and +45 million.

With respect to tankers, even though the number of product tanker deliveries is decreasing, continued deliveries of many crude oil tankers are expected to put pressure on freight rates.

Norden entered the year with 21% coverage and the company expects adjusted annual results in tankers to be between USD -15 and +15 million.

On group level, the guidance is in the range of USD -20 to +40 million.

“The midpoint of our guidance is consequently plus USD 10 million, so after some difficult years, we believe that we are headed towards brighter prospects – also in terms of results,” he concluded.

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