Tanker Rate Improvement Predicted this Year

Hung said the company is making fuel-saving improvements to its ships

Global tanker rates are likely to improve in the second half of this year, Teekay spinoff Tanker Investments Ltd. (Tanker Investments) said Thursday, according to Platts.

Growing oil demand and a declining number of Aframax and Suezmax vessels will support lower rates, said CEO William Hung, adding that the company will benefit.

"All of our ships are trading in the spot market and, with current vessel prices still below long-term average values, we intend to continue growing Tanker Investments' fleet," he said.

The company was formed in January 2014 by Teekay Tankers Ltd. and Teekay Corp. to trade and operate secondhand mid-size tankers to take advantage of market fluctuations.

Tanker Investments took delivery of eight tankers in the second quarter of this year and completed fuel-saving modifications on another vessel, the MT Jiaolong Spirit.

The company plans to drydock four more vessels in Q3, when the spot market is likely to experience a seasonal slowdown.

"Similar to the MT Jiaolong Spirit, these vessels will also receive fuel-saving modifications and will complete their drydock in time to take advantage of what we expect to be a strong winter period in the spot tanker market," Hung said.

Hung said average weekly Aframax and Suezmax rates rose from a range of $11,000 to $14,000 per day in early June up to more $43,000 to $44,000 per day in July, due partly to seasonal changes.

"In addition, the tanker rates in the first and second quarters of 2014 have been stronger than the respective quarters in 2013, indicating that the fundamentals in the tanker market are improving," he added.

The new company posted a Q2 net loss of $5.7 million on revenues of $17.3 million.

The Tankers International fleet consists of five Aframax and four Suezmax vessels, according to its website.