Thursday, March 19, 2015

The NYFEX Report: A Survey of Suezmax Shipping Companies

In this installment of The NYFEX Report (a newsletter aiming to provide expert equity research analysis & commentary on the shipping industry) I will look into publicly trading companies that have material ownership interests in suezmax vessels.

The recent collapse in oil prices may have been bad news for oil producers but not so much for ship-owners. Tanker shipping companies have been the beneficiaries of increased demand for oil transportation to take advantage of low prices.

Another positive factor working in ship-owners favor is the moderate order book for new-building deliveries. This stands in sharp contrast to the dry cargo industry, which has been plagued by a chronic tonnage over-supply and still has a significant order book to digest.

Whether the increased demand for oil transportation is just temporary to replenish inventories at low prices or the beginning of a secular up-cycle remains to be seen. Until then tanker ship-owners can put a long-overdue smile in their faces and enjoy the ride.

Suezmaxes are million barrel tankers than are employed in a variety of medium-range trades. Despite the sharp reduction of North American imports from West Africa, suezmaxes have managed to develop new trading routes, particularly in Asia, and even compete in long-haul trades with VLCCs.

This article will provide a survey of publicly traded companies that own large suezmax fleets and can offer investors exposure to that particular market.

There are currently four such companies: Euronav (EURN), Nordic American Tankers (NAT), Frontline (FRO), and Tsakos Energy Navigation (TNP). I have also included in the survey privately held Principal Maritime (PMAR). Principal Maritime has filed a registration statement with the SEC for a pending IPO on the New York Stock Exchange.

Continue reading the full article published on Seeking Alpha

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