Danish carrier of refined oil products TORM has installed 40 scrubbers on its ships from the planned 49, the company revealed in its business report.
TORM added that of the remaining nine installations, five are expected to be conducted in the third quarter this year, one in the fourth quarter this year and one in the third quarter of 2021.
The remaining two scrubbers will be installed on the two LR2 newbuildings to be delivered in the fourth quarter of 2021.
The company said that it has received a commitment for the financing of scrubbers and ballast water treatment systems on four vessels from an unnamed international financing institution.
The drawdown of the debt will be approx. $ 12 million and will be made when all installations are finalized later in 2020.
After the quarter ended, TORM also secured a commitment from Hamburg Commercial Bank to refinance $35 million in senior secured debt covering five older vessels.
The refinancing will postpone the debt maturity related to these vessels from 2021 to 2025, thereby providing additional financial flexibility.
“The strong market during the first quarter continued into the second quarter of 2020, which has resulted in the strongest half-year since 2008. TORM achieved a profit before tax of $ 128 million for the first six months of 2020. I am pleased that TORM’s strong financial position allows us to distribute a total of $ 63 million, or DKK 397m, in dividends to our shareholders for the half-year. With recent sales of seven older vessels at attractive prices, we have continued our ongoing fleet renewal activities, enabling TORM to actively pursue attractive opportunities in the market as they arise,” says Executive Director Jacob Meldgaard.
“Further, I am pleased that at this point in the third quarter of 2020, TORM’s solid operational platform has secured strong bookings that indicate a positive result for the whole quarter.”
During the second quarter of 2020, TORM took delivery of the MR newbuilding TORM Stellar and sold five older vessels: three 2002-built MR vessels TORM Mary, TORM Gertrud and TORM Vita and two LR2 vessels: 1999-built TORM Kristina and 1997-built TORM Helene.
After the second quarter ended, TORM has sold another two MR vessels: the 2002-built TORM Gerd and TORM Caroline, expected to be delivered to the new owners later in 2020.
The seven vessels have been sold for a total consideration of $ 66 million of which $ 10 million were received in the second quarter of 2020. TORM will repay a total of $ 37 million in debt in connection with the vessel sales, and $ 9 million has been repaid in the second quarter of 2020.
The second quarter of 2020 was characterized by significant market volatility with product tanker rates reaching all-time high levels by the end of April, supported by temporary export boosts and floating storage.
The strong market was a result of the COVID-19 outbreak that dramatically reduced oil demand while the OPEC+ price war at the same time resulted in an increased oil production in March and early April. This led to the stock building of an unprecedented scale, including floating storage.
Especially operational floating storage due to discharging issues at terminals and refineries tied up product tankers and effectively removed vessels from the market.
However, by the end of June, rates had come off as the oil market started to rebalance, resulting in a significant part of the tonnage in floating storage being released.
TORM said that the current uncertainties in the product tanker market are driven by the speed towards normalization of the demand and supply situation in the oil market.
The pandemic continues to hamper crew changes due to travel bans and quarantine in several countries around the world.
Since the end of June, TORM has conducted more than 700 crew changes, reducing the percentage of crew with overdue employment from approx. 40% to approx. 10% of the total crew on board TORM’s vessels.