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Shippingwatch: Odfjell is optimistic about chemical tanker in 2021 on the heels of the best result in 12 years

In 2020, Odfjell likely surpassed one billion dollars in revenue and doubled its operating result to USD 125-130 million. 'We have an optimistic view of the chemical tanker market in 2021, but we're not naive,' CEO Kristian V. Mørch tells ShippingWatch.

The below is an excerpt from an article in Shippingwatch published January 5, 2021.
Written by Dag Holmstad.

(...) Despite the coronavirus pandemic, periodic lockdowns of global economies and comprehensive travel restrictions to control contagion, significant parts of the chemical tanker market have remained almost unaffected. In the second quarter of the year, the market thrived, as customers built stockpiles to be on the safe side. For the remainder of 2020, the chemical tanker market also produced positive results. And Odfjell plans to continue this in 2021.

"It's been one of the strongest markets for chemical tanker in the past 25 years in terms of supply and demand. We've seen growth in all quarters. That tells us that it's a fairly robust market," Mørch says.

Growth will accelerate in 2021

2020's positive market development was largely driven by a low influx of newbuilds, mainly because many tanker companies are still hesitant to invest. This is because they are unsure of which technology to opt for in order to best prepare their new vessels to comply with increased environmental requirements.

Meanwhile, 2020 was also characterized by a greater than expected increase in demand. If countries around the world manage to get the Covid-19 contagion under control – with the help of the already launched vaccination programs – the global economy is expected to accelerate in 2021. (...)

Fears significant correction

"That's why we've exited 2020 with relief and entered 2021 with a fundamental optimism," says Mørch, although adding: "We're not naive. We assess that there may be a risk of a major correction of the global economy. Several countries have massive debt, interest sits at around zero and stock markets beat one record after the other. If there will be a downturn, it's difficult to imagine that we won't get hit. That's why we're trying to be disciplined in our business. We are constantly working to reduce potential risks."

(...) Odfjell has in recent years renewed its fleet and has now almost achieved its target of commanding more than 100 tankers. In part, this has been done through a new pool collaboration with two other tanker companies, Navig8 Chemical Tankers and TRF.

"We've completed our fleet renewal program, so there's no uncertainty in our investment program. We're able to concentrate on operations. There's a sweet spot somewhere around where you have the size to be flexible enough to maneuver the fleet but without being so big that you become your own worst competitor. We're in a comfortable place and don't have crazy growth plans or wild ambitions."

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