Nordic American Tankers to benefit from improved supply-demand fundamentals of mid-sized tankers
The crude tanker market was largely on an uptrend throughout the year barring the initial weakness amid the Omicron-led demand concerns and high oil prices. We expected the tanker market to recover gradually in 2022, but the changes in trade patterns as a result of Europe’s move to reduce energy dependence on Russia in the aftermath of the Russia-Ukraine conflict accelerated the pace of recovery in the crude tanker market. The diversion of Russian barrels on long-haul routes to Asia and increased European imports from the Middle East and trans-Atlantic routes led to a surge in demand and spot TCE rates of crude carriers, which supported the rally in the stock prices of crude tanker companies. Accordingly, the Drewry Crude Tanker Equity Index jumped 97.6% in 2022 and has substantially outperformed the S&P 500 which declined by 19.4% over the same period.Trending in line with the sector index the stock price of Nordic American Tankers (NAT) generated a hefty return of 81.1% in 2022. Recent updates from NAT suggest that the company is fixing its vessels at very high spot rates in the range of USD 50,000pd to USD 80,000pd indicating that financial performance in 4Q22 will be even better. We believe mobility restrictions in major oil importing economies due to the sudden surge in Covid cases, seasonal weakness, and news of potential recession could put pressure on NAT’s stock prices in the short run, but in the long term the company is poised to benefit from strong demand and low fleet growth in mid-sized crude carriers.
Drewry, since 1970, has been providing research and advisory services on the global Maritime and Shipping industries and has established itself as a firm with long history of credibility and expertise on various aspects of the maritime industry. Leveraging this in-depth market knowledge and understanding, we have extended our offering to deliver a unique, independent investment research service on globally listed companies operating in the maritime industry. Under the brand Drewry Maritime Equity Research and in accordance with the FCA, DMER led by Rahul Kapoor and his team, offers fundamental analysis on listed companies. DMER analysts have access to one of the most up-to-date, comprehensive and reliable sources of market insight and research data available today. By combining these market-leading resources with seasoned sector expertise and commercial awareness, we are able to offer a highly differentiated and comprehensive investment research service to prospective investors in listed maritime companies. We look at globally listed companies within the following sectors: Port Operators, Container Shipping, Container Manufacturing & Leasing, LNG Shipping, Dry Bulk Shipping and Tanker Shipping. Combine in-depth sector expertise with financial analysis focusing on over 50 stocks globally.
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