Euronav NV reported its non-audited financial results today for the first quarter ended 31 March 2024.
For the first quarter of 2024, the Company realized a net gain of USD 495,2 million or USD 2.46 per share (first quarter 2023: a net gain of 175.0 USD million or USD 0.87 per share). EBITDA (a non-IFRS measure) for the same period was USD 550.5 million (first quarter 2023: USD 258.5 million).
TCE
The average daily time charter equivalent rates (TCE, a non IFRS-measure) can be summarised as follows:
EURONAV & CMB.TECH FLEET DEVELOPMENTS
Newbuilding orders
Bitumen tankers
On 26 February 2024, the Company announced that it had concluded an order for two bitumen tankers with China Merchants Jinling Shipyard (Yangzhou) Dingheng Co. (Yangzhou, China). The vessels are expected to be delivered in the fourth quarter of 2026 and have been chartered to a strong counterparty for 10 years upon delivery from the shipyard. The vessels will have dual-fuel green methanol engines that are ready to be retrofitted for future operation on ammonia.
Dry-bulk vessels
Euronav concluded an order for an additional two Newcastlemaxes for delivery in the first half of 2027. This brings the total Newcastlemax fleet to 4 ships on the water and 24 on order for delivery in 2024-2027.
Container vessels
On 12 February 2024, CMB.TECH, in partnership with Yara Clean Ammonia, North Sea Container Line, and Yara International, announced the commissioning of the world’s first ammonia-powered container ship, Yara Eyde. This pioneering vessel, constructed at Qingdao Yangfan Shipbuilding, marks a significant milestone in decarbonising shipping, operating on clean ammonia between Norway and Germany. Owned by Delphis, a division of CMB.TECH, and operated by NCL Oslofjord AS, this collaboration sets a new standard for sustainable maritime transport.
Sales
Crude oil tankers
3 N-class vessels sold: Euronav has sold the VLCC Nectar (2008 – 307,284 DWT), VLCC Newton (2009 – 307,208 DWT), and VLCC Noble (2008 – 307,284 DWT). Delivery of the vessels is expected during Q2 2024 and a capital gain of approximately USD 82.7 million will be booked.
The remaining 13 VLCC’s were delivered to Frontline. The total capital gain in Q1 amounted to USD 372.7 million.
Newbuilding deliveries
Crude oil tankers
On 6 February 2024, the Company took delivery of Suezmax Bristol (2024 – 156,851).
Dry-bulk vessels
On 18 March Euronav & CMB.TECH took delivery of the fourth super-eco Newcastlemax Mineral France (2024 – 210,000 DWT).
Update – Newbuilding delivery schedule
Outstanding capital expenditure for the 57 vessels currently under construction at the end of Q1 2024 was USD 2.908 billion, split as follows: USD 924.2 million in 2024, USD 910.0 million in 2025, USD 913.0 million in 2026 and USD 233.7 million in 2027.
TANKER MARKET & OUTLOOK
Euronav – Tanker Markets
From the demand-side perspective, global oil demand has remained resilient through the first few months of 2024. The International Energy Agency (IEA) has recently revised the 2024 global oil demand upwards by +110kb/d, projecting a continued growth trajectory. Anticipated figures indicate a rise of +1.3 mb/d in 2024 and +1.1 mb/d in 2025. Furthermore, there is sustained growth expected in tonne-mile crude oil trade, with projections indicating a 4.3% increase in 2024 and a 2.5% increase in 2025 – mainly driven by US oil exports hitting an all-time high in mid-April 2024.
Crude oil tanker supply-side remains supportive even after the recent increase in tonnage orders for both VLCC and Suezmax vessels. The order book remains below historic averages, with 5.1% VLCC and 13.8% Suezmax vessels on order. The supply-side is further supported by the aging global fleet. By 2026, approximately 25% of the fleet is expected to be over 20 years old, posing operational and efficiency challenges.
Market participants are closely monitoring geopolitical tensions for potential disruptions to oil supply routes. This has led to increased geopolitical risk premiums and a ‘buy and fix first’ attitude, shifting some power to owners. Long-term positive sentiment is mainly driven by supply-side dynamics – keeping interest rates high for longer, while any reversal from OPEC+ production cuts would increase rates further.
Q2 2024 spot rates to-date: so far 63% fixed at 49,465 USD per day for VLCCs and 54% fixed at 41,841 USD for Suezmaxes.
Bocimar – Dry-Bulk Markets
The dry bulk demand side is characterised by sustained growth in tonne-mile trade, with projections indicating a 2.1% increase in 2024 and a 1.3% increase in 2025. Notably, China’s GDP growth is expected to be 5.0% in 2024 and 4.1% in 2025, driving demand in the region.
Supply-side is characterised by a historical low order book, with an order book-to-fleet ratio of only 5.9% for the Capesize fleet. In addition, the supply-side is further supported by ageing vessels. By 2027, 70% of Capesize vessels are expected to be over 15 years old.
Historically high earnings have been observed in Q1 2024 for Capesizes, fuelled by increased activity in the Atlantic and rising Chinese imports. Positive sentiment continues, driven by supply-side dynamics and optimism in freight futures markets. The futures curve continues to steepen, with the May contract now trading some 30% above spot, supporting the belief that rates will continue to recover for the rest of the year and beyond. In addition, recent Newcastlemax orders in China are rumoured to be USD 80 million with delivery in 2028 – confirming the value of Bocimar’s newbuild Newcastlemax fleet (total vessels of 10 end Q4 2024, 19 vessels end 2025 and 28 vessels end Q1 2027).
Q2 2024 spot rate so far: 55% fixed 37,063 USD per day.
Delphis – Container Markets
The container market anticipates growth in TEU tonne-mile of 5.5% in 2024, and 0.9% in 2025. The container trade volume growth is forecasted 3.6% in 2024, and 3.9% in 2025.
Container shipping markets are much improved versus late 2023 amid ongoing (temporary) supply-demand impacts from the rerouting of vessels away from the Red Sea. Growing demand is largely offset by the historically high expected fleet growth. The box fleet will grow by 11.0% in 2024, and 4.9% in 2025. The order book-to-fleet ratio stands at 25% in 2024.
6,000 and 1,400 TEU container vessels are all employed under 10 to 15-year time charter contract.
Bochem – Chemical Markets
The fundamentals of demand in the chemical tanker market are mainly driven by global GDP growth (3.1% in 2024, and 3.2% 2025). In addition, growth in tonne-mile is projected at 4.2% increase in 2024, driven by healthy demand growth supported by increased volumes of products being transported over longer distances. The increase in tonne miles is further supported by (temporary) disruptions to the Panama and Suez Canal, but supply chain disruptions also affect volumes transported.
The order book to fleet ratio is 5.5% of the current core chemical tanker fleet and ~ 20% of the fleet is currently 20 years or older. The supply-side is further supported by the limited swing tonnage due to a favourable product tanker market.
25,000 DWT chemical tankers are employed under 10-year time charter (4 vessels) and in the spot pool (2 vessels).
Windcat – Offshore Wind Markets
The substantial upfront costs of building a wind farm without an attractive energy rate provided by governments means developers and operators are choosing to delay or cancel projects wherever possible. These project delays have led to a short-term decrease in fixed-bottom installations forecast for 2024 and 2025, but potential energy rate increases offered by government authorities should lead to strong growth in installations towards the end of the decade as projects reach FID. In addition, improvements in the offshore oil & gas investment environment contribute to demand. Windcat CTVs and CSOVs are flexible to be employed in either offshore wind, and/or offshore oil & gas industry.
The Q1 2024 demand for proven, low-emission offshore wind vessels to support construction and operations across the Europe offshore market has been supportive – driving the utilisation levels of the CTV fleet to 80.1% for Q1, and 85.4% for the rest of the year.
Constraints in fleet supply remain supportive of market conditions, with limited availability of capable (future proof) crew transfer and construction support vessels.
CTV employment contracts consist out of a mix of spot contracts and long-term time charter commitments.
DISTRIBUTION TO SHAREHOLDERS
The Supervisory Board decided to amend the dividend policy to a fully discretionary dividend policy.