Scorpio Tankers Inc. (STNG) Q4 2022 Earnings Call Transcript

Scorpio Tankers Inc. (NYSE:STNG) Q4 2022 Earnings Conference Call February 16, 2022 8:30 AM ET

Company Participants

James Doyle - Head of Corporate Development and IR

Emanuele Lauro - Chief Executive Officer

Robert Bugbee - President

Brian Lee - Chief Financial Officer

Cameron Mackey - Chief Operating Officer

Lars Dencker Nielsen - Commercial Director

Conference Call Participants

Omar Nokta - Jefferies

Frode Morkedal - Clarksons Platou Securities

Benjamin Nolan - Stifel

Ken Hoexter - Bank of America Merrill Lynch

Greg Lewis - BTIG

Operator

Hello, and invited to nan Scorpio Tankers Inc. Fourth Quarter 2022 Conference Call. All participants will beryllium successful listen-only mode. [Operator Instructions] After today's position location will beryllium an opportunity to inquire questions. [Operator Instructions] Please statement this arena is being recorded.

I would now for illustration to move nan telephone complete to James Doyle, Head of Corporate Development and Investor Relations. Please spell ahead.

James Doyle

Thank you for joining america today. Welcome to nan Scorpio Tankers Fourth Quarter 2022 Earnings Conference Call.

On nan telephone pinch maine coming are, Emanuele Lauro, Chief Executive Officer; Robert Bugbee, President; Cameron Mackey, Chief Operating Officer; Brian Lee, Chief Financial Officer, Lars Dencker Nielsen, Commercial Director.

Earlier today, we issued our 4th fourth net property release, which is disposable connected our website, scorpiotankers.com. The accusation discussed connected this telephone is based connected accusation arsenic of today, February 16, 2023, and whitethorn incorporate forward-looking statements that impact consequence and uncertainty. Actual results whitethorn disagree materially from those group distant successful specified statements. For a chat of these risks and uncertainties, you should reappraisal nan forward-looking connection disclosure successful nan net property release, arsenic good arsenic nan Scorpio Tankers' SEC filings which are disposable astatine scorpiotankers.com and sec.gov.

Call participants are advised that nan audio of this convention telephone is being broadcasted unrecorded connected nan Internet and is besides being recorded for playback purposes. An archive of nan webcast will beryllium made disposable connected nan investor relations page of our website for astir 14 days.

We will beryllium giving a short position today. That position is disposable astatine scorpiotankers.com connected nan investor relations page nether Reports and Presentations. The slides will besides beryllium disposable connected nan webcast. After nan presentation, we will spell to Q&A. For those asking questions, please limit nan number of questions to two. If you person immoderate question, please rejoin nan queue.

Now, I’d for illustration to present our Chief Executive Officer, Emanuele Lauro.

Emanuele Lauro

Thank you very much, James. Good morning, aliases afternoon, everyone and acknowledgment for taking nan clip to subordinate america today. So nan 4th fourth was a beardown decorativeness to nan champion twelvemonth successful nan company’s history. In 2022, nan institution generated $1.1 cardinal successful EBITDA. It would person been very, very difficult to ideate this only 12 months agone since nan first 4th of 2022 was really a nonaccomplishment making 4th for nan company.

So considering this and considering that we are often asked whether 2023 could beryllium amended than 2022. So it’s yes, we do expect this twelvemonth to beryllium amended than 2022. The marketplace fundamentals which created a beardown complaint situation stay intact and our outlook has not really changed if thing it has improved pinch recession fears easing and nan reopening of nan world’s 2nd largest economy.

The institution enters 2023 pinch its strongest financial position successful its history and while our superior allocation is prioritize nan equilibrium expanse and results aft reducing our indebtedness by much than $1.2 cardinal successful 2022, we person accrued our expertise and elasticity to allocate capital. Since July, we person repurchased 5.8 cardinal of our communal shares for $256 million.

Today we announced nan renewal of our securities repurchase programme for up to $250 cardinal and we announced besides nan doubling of our quarterly dividend from $0.10 to $0.20 per share.

I'd for illustration to look astatine nan existent property merchandise itself and conscionable spell done nan array related to rates quickly. I deliberation it's very important. On nan left-hand side, we spot nan rates that we booked truthful acold this quarter. And those by themselves are -- they are a confirmation really of what we were saying successful October. They're solid. They are going to hit astir analysts' expectations and hit consensus, but they whitethorn not by themselves show what is really going connected retired location successful nan marketplace correct now, and what could happen. As we tin spot that basically, there's astir 10% of unfastened days left.

And connected nan right-hand side, up until, let's say, past Friday, these are nan fixtures betwixt December 1 and past Friday, we tin spot a tremendous summation successful rates. But correct now those rates themselves, up until Friday person been surpassed by what we're fixing successful nan marketplace and what we're seeing successful nan market. So that past 10% could person rather a precocious delta. And that could beryllium truthful precocious that it could materially impact those bookings for 4th quarter, moreover though nan existent fixtures that we're doing astatine this clip of twelvemonth are starting to really beryllium put successful nan book for nan first quarter.

So what you person present is simply a marketplace that's strengthening beyond what we've sewage present connected nan table, and we person a marketplace and we person fixtures that are closing 4th fourth higher than nan averages you're seeing here, and opening nan first 4th astatine simply bonzer outstanding numbers that we are already astatine all-time highs. And these numbers that are coming successful for nan first 4th correct now are huge. There's nary different measurement to opportunity that, and which you'll spot done nan presentation, we don't spot this marketplace backing disconnected astatine nan moment. We're successful a existent seasonal strength. We've sewage existent ember [ph] coming into nan Northern Hemisphere and we person very beardown underlying fundamentals that are being respected by increases successful nan clip charter rates. The 1 twelvemonth charter rates person moved very strongly.

And that's really I'd for illustration to present this, walk it to James to commencement going done nan specifications and past we'll get into immoderate Q&A pinch Lars. Thank you very much.

James Doyle

Thanks, Robert. Well, not arsenic breathtaking arsenic LR2s astatine $90,000 per day, but it's been an breathtaking twelvemonth for nan company, and we wanted to supply a little update connected caller events earlier nan commercialized discussion.

So if we could please spell to Slide 6. Strong rate flows are transforming nan equilibrium expanse of nan institution and improving nan value of Scorpio Tankers arsenic an investment. In December, we gave announcement to workout acquisition options connected six much vessels nether waste leaseback. And successful total, since August, we person fixed announcement to workout nan acquisition action connected 29 vessels nether waste leaseback financing, which erstwhile completed will trim indebtedness by adjacent to $500 million.

So far, lease repurchases person been financed pinch rate flow, but pinch 2 caller in installments accommodation for up to $166.5 cardinal that were announced today, we tin accelerate nan repurchasing of much costly lease financing and switch it pinch little costly commercialized slope financing. The caller accommodation carnivore liking astatine SOFR positive a separator of 1.9% to 1.925%, which is substantially little than nan 3.2% to 5.4% lease financing it's replacing.

In December, we repurchased $28.6 cardinal of nan company's shares astatine an mean value of $51.20. And since July, we person repurchased $3.7 cardinal of nan company's shares for astir $149.3 million. And lastly, we entered into a clip charter statement for an LR2 astatine $37,500 per day, which is taxable to last customer support but reflects nan continued betterment successful outlook and rates from our customers.

Slide 7, please. Well, pinch nan conversion of nan convertible enslaved and six further lease repurchases, nan institution will trim its indebtedness by astir $1.3 cardinal this year. And nan past clip nan company's indebtedness was beneath $2 cardinal was December 2017 pinch a fleet of 78 owned vessels. So we're very excited pinch nan advancement we're making.

Slide 8, please. So acold successful nan 4th quarter, nan fleet has booked an mean TCE complaint of complete $45,000 a day. On an yearly basis, this would equate to $1.3 cardinal successful free rate travel aliases a small complete $22 a share. Despite extending this sensitivity churn to $60,000 per day, arsenic you tin show from nan December fixtures, existent rates are good supra that. But successful nan arena rates would average, opportunity 60,000 for nan year, nan institution would make almost $2 cardinal successful free rate aliases $39 per share.

Slide 10, please. Since March, nan refined merchandise tanker marketplace has been resilient. Rates person oscillated betwixt $30,000 and $60,000 per day, moreover during seasonally weaker periods specified arsenic refinery maintenance. Recently, we've seen a important summation successful rates. The confluence of factors and grade to which those factors are impacting our markets is unprecedented.

Slide 11, please. Global inventories stay astatine grounds lows pinch request continuing to outpace supply. Over nan past 2 years, nan U.S. has drawn complete 471 cardinal barrels of crude lipid and refined products. At nan aforesaid time, globally distillate inventories person decreased complete 240 cardinal barrels. Post refinery attraction runs person increased. And complete nan past 2 weeks, U.S. Gulf refineries person operated astatine 98.2% and 97.3% utilization, and these barrels are very overmuch needed. Higher refinery runs are needed some now, arsenic wintertime approaches and arsenic Robert mentioned, but besides adjacent twelvemonth pinch request expected to summation done 2023.

Slide 12, please. Seaborne refined merchandise exports person reached grounds levels. Product exports are averaging 25.3 cardinal barrels per time complete nan first 2 weeks of December. With inventories adjacent historical lows, refining capacity closures and request increasing, merchandise tankers now much than ever are being utilized to proviso much contiguous request and from further afar. The effect of refinery closures successful places for illustration Europe and Australia is apparent. Both regions are experiencing grounds levels of refined merchandise imports arsenic you tin spot successful nan graph.

Since lifting its export quotas, China's refined merchandise exports person accrued significantly. However, arsenic COVID restrictions easiness and home request increases, it's unclear if China will beryllium capable to support nan existent levels. What is clear is that nan barrels are needed. Trade routes are changing, exports are astatine grounds levels and ton miles are increasing. The incremental tube continues to go much difficult to find.

Next year, caller Middle Eastern refining capacity additions will beryllium captious to meet incremental demand, particularly if there's an effect to a alteration successful Russian refined merchandise flows.

Slide 13, please. Last week, nan EU implemented its Russian crude lipid import ban, stating that immoderate alloy transporting Russian crude sold astatine a value supra nan $60 value headdress is prohibited from European security and finance. While 1 week is simply a mini sample size truthful far, seaborne Russian crude exports person declined by almost 50%. China and India person been nan incremental buyers since nan penetration of Ukraine.

On February 5, nan EU will instrumentality a akin prohibition for refined products. So acold we person yet to spot a awesome displacement successful refined merchandise flows. And actually, complete nan past 2 months, Russian merchandise exports person increased, and astir of nan imports person gone to Europe. In nan arena Russian exports are rerouted to different regions aft February 5, location would beryllium a important summation successful ton-mile demand. If Russian exports decline, refined products will request to beryllium originated from further afield, starring to a important summation successful ton-mile demand. Every replacement script requires sending a tube longer distance, tightening alloy proviso and expanding ton miles.

Slide 14, please. Next year, we expect yearly quarter-over-quarter increases successful refined merchandise demand, driven by increases successful gasoline, pitchy substance and naphtha pinch location imbalances expected to persist owed to refinery dislocation, request expanding and nan imaginable impacts from Russia's penetration of Ukraine. Seaborne merchandise exports are expected to summation almost 1 cardinal barrels a time and ton-mile request complete 9% adjacent year. Since 2000, seaborne exports of refined products person accrued successful 19 of nan past 22 years, moreover during nan world financial crisis.

Lower freight complaint environments person typically been owed to oversupply. Today, this is overmuch different. Supply could beryllium nan astir charismatic portion of nan equation.

Slide 15, please. The bid book is astatine a grounds good pinch 4.8% of nan fleet connected order. Yards are booked until 2025 and utilizing minimal scrapping assumptions, nan fleet will turn little than 1% complete nan adjacent 3 years. Using higher scrapping assumptions owed to nan fleet property and upcoming biology regulation, nan fleet will shrink complete nan adjacent 3 years. Seaborne exports and ton-mile request are expected to summation 3.6% and 9.7% adjacent year, outpacing fleet growth.

The confluence of factors successful today's marketplace are constructed individually, historically debased inventories, expanding request exports and ton miles, structural dislocation successful nan refinery system, imaginable changes to Russian merchandise flows, constricted fleet maturation and upcoming biology regulations. However, collectively, together, they are unprecedented.

With that, I'd for illustration to move it complete to Q&A.

Question-and-Answer Session

Operator

Ladies and gentlemen, astatine this clip we will statesman nan question-and-answer convention [Operator Instructions]. Our first mobility coming comes from Omar Nokta from Jefferies. Please spell up pinch your question.

Omar Nokta

Thank you. Hey guys. Good morning. Thanks for nan update. Clearly, a batch of affirmative things are happening, some successful nan marketplace and your net and your equilibrium sheet. And arsenic you highlighted, Robert, 4Q now looks to beryllium nan apical 4th of nan twelvemonth and 1Q starting disconnected present astatine an exceptional aliases bonzer level.

I wanted to inquire basically, if you could conscionable possibly framework what's been going connected successful nan merchandise marketplace recently, particularly nan six weeks aliases truthful since you reported earnings. What's happened to origin rates to get to this constituent wherever LR2s are earning, arsenic you show here, $90,000 a time and $75,000 connected nan MRs?

Lars Dencker Nielsen

Yes. I'll springiness a bully stab here. Hi, Omar. To beryllium honest, nan marketplace backmost past was besides very strong. What we person seen is conscionable a continued betterment of this sustainable strength. And 1 of nan things that we tin spot now arsenic a vessel proprietor is that we bask front-haul economics moreover connected backhauls arsenic well. So erstwhile you look astatine nan TC1 Index arsenic a market, it will astir apt people coming astatine $70,000, $75,000 a day. And astatine that time, it was astir apt $55,000 to $60,000 a day. But nan truth of nan matter is that because of these immense exports retired of North Asia, wherever nan destination optionality has really benignant of presented itself pinch a batch of benignant of chances and options for nan owners.

So we are moving LR2s now retired of North Asia down to Singapore at, let's telephone it, $100,000 a day. We're moving it astatine $110,000 a time aliases $120,000 a time into Australia. We tin reload retired of Australia pinch condensate, which is besides a nifty point for nan LR2s, which pinch backhaul economics into nan AG is besides presenting itself pinch astir $80,000 a day. What we've besides seen arsenic we moved into nan backmost extremity of nan 4th fourth has been an summation successful exports arsenic good coming retired of nan Mediterranean.

So location has been an progressive marketplace of ray ends moving from nan Med going backmost to Asia. So arsenic we person been fixing our ships pinch distillate into nan Continental, into Mediterranean we person been capable to rather successfully being loading vessels arsenic good retired of nan Mediterranean and nan Continent backmost to Asia.

What we're seeing present is an elongation of positions. So if you look astatine nan position is coming connected nan 14 of December successful nan Middle East connected LR2s, you are seeing astir apt nan tightest position is that we person seen for a very agelong time. And it is my position that we're going to commencement seeing that marketplace to respond arsenic good moreover much positively. So today, it's astir apt printing astatine Worldscale 305, trading $85,000 connected axenic information voyage. But successful reality, because of each this capacity that we tin spot successful position of triangulation, rates are going to beryllium substantially higher from that.

Omar Nokta

Thanks Lars. Yes, it sounds for illustration that $90,000 and $75,000 are debased comparative to what you're seeing today. And I conjecture I wanted to make sure, James mentioned this, but immoderate of what we're seeing coming coming arsenic a consequence of nan Russian prohibition astatine slightest connected products coming successful February? Or is that still a catalyst to come?

Lars Dencker Nielsen

I judge it's a catalyst that's going to really show itself arsenic we move past nan 5th of February. We person evidently seen a batch of nan aforesaid molecules moving from nan Baltic and nan Black Sea into nan aforesaid European destinations, and that is still continuing. And arsenic James said, we've seen an summation successful volumes arsenic we're ramping up nan stocks arsenic overmuch arsenic Europe tin do up to nan 5th of February.

But nan truth of nan matter is, and this is really important, is that it doesn't matter what marketplace you're in. You tin beryllium successful nan Far Eastern market, you tin beryllium successful nan Middle Eastern market, you tin beryllium successful South America aliases successful nan U.S. Gulf. All markets connected each sizes are ramping up. So you don't person immoderate weaknesses wherever you could opportunity that positions are being moved from that area to different area. You've sewage bully marketplace aliases very, very bully markets successful each areas astatine nan moment, irrespective of what's happening pinch Russia.

Now clearly, what we person been seeing complete nan past mates of months has been this summation successful imports into Europe of distillates successful particular. But arsenic we spell past that 5th of February deadline, replacement products will yet person to recreation further. And nan ton miles will surely besides summation for nan LRs and besides for nan MR merchandise carriers. So 1 thing, of course, you've sewage refineries that are moving moreover harder. You've sewage precocious utilization rates crossed nan board. The imaginable of immoderate of these tripping complete will summation owed to nan measurement they tally them truthful hard, which, of course, will besides summation nan dislocations and nan arbitrages commencement moving up moreover further.

So there's surely plentifulness of merchandise that we've seen to move. We tin spot summation successful volumes some successful China and besides successful nan Middle East and besides products retired of West Coast India, each of it going long-haul and it's not needfully only going to Europe. But we're seeing besides worldly going to West Africa, to South America and truthful on. Again, we're seeing this optionality connected destination, which surely for a vessel proprietor who wishes to triangulate very efficaciously is very bully news.

Omar Nokta

Got it. Yes. Thanks for that further color, Lars. And 1 last 1 for me, conscionable connected nan 3 twelvemonth charter, connected nan LR2, nan $37,500 is nan caller high, astatine least, I think, from what we've seen successful nan marketplace recently. You noted that this is connected a guardant transportation basis. Just wanted to get a consciousness from you guys, really acold guardant is that deployment? And immoderate thoughts connected why nan charterer doesn't return that vessel today.

Lars Dencker Nielsen

I deliberation -- well, I deliberation we -- that 1 is still a taxable position, I think, we'll conscionable opportunity for nan first 4th location first quarter. And nan why is not nan charterer nan why is partially excessively arsenic well. I mean, evidently erstwhile nan marketplace is hot, you're not necessarily, moreover if it's a awesome complaint for illustration $37,500 for 3 years, you're still not anxious to -- we're not very anxious to hole our tonnage out. We've sewage a very precocious spot position. We're very assured to nan coming market. I would time off it astatine that.

A - Robert Bugbee

I deliberation I'll conscionable adhd to that, Omar, that successful position of activity successful nan clip charter marketplace and nan enquiry levels that we're seeing successful our task department, it surely has not abated. I mean there's plentifulness of liking from apical tier customers wanting to return semipermanent charters going forward.

Omar Nokta

Very good. Well, acknowledgment guys. I will move it over.

Operator

Our adjacent mobility comes from Frode Morkedal from Clarksons Securities. Please spell up pinch your question.

Frode Morkedal

Thank you. Hi guys. The market's really strong. Yes, it is strong. It is strong, yes. So $90,000 per time for LR2s successful December. Considering that nan marketplace is improving by nan day, could you show maine what's nan outlook successful nan adjacent future?

Robert Bugbee

Hold on, conscionable want to say. Lars has already said that he's fixed maine a higher than nan $90,000, now fixing successful nan $100,000 connected nan LR2s. I'd first benignant of -- I cognize you stuck your cervix retired and said that a while backmost erstwhile it was rather arguable astatine nan clip that we would spot $150,000, $200,000 a time connected LR2s this winter. I would conscionable for illustration to remark that you're going to spot $150,000, $200,000 a time connected astir most apt this winter, but you're astir apt really going to spot that connected Handysize vessels first.

That will springiness you in installments for your, what was astatine nan time, thought to beryllium by immoderate arsenic a very royal call. So Lars, I don't cognize if you want to adhd to that.

Lars Dencker Nielsen

It would not astonishment maine that this winter, we will spot complete $100,000 connected Handies aliases MRs aliases LR2s, which evidently LRs is already doing. I deliberation each segments are connected fire.

Frode Morkedal

Perfect. That's great. I conjecture my adjacent mobility is, successful bid to explicate this because February 5 hasn't happened yet, right? So person you seen immoderate different merchandise arbitrage movements successful caller months? And successful relationship pinch that, are possibly ballast lengths increasing?

Lars Dencker Nielsen

I would opportunity Frode, to reply your past question, ballast lengths astatine nan infinitesimal are decreasing. We're seeing a batch much triangulation connected LR2s than we've ever seen. We're seeing a batch of triangulations connected MRs arsenic well. So -- it surely is not increasing. When it comes to nan first portion of nan question, we're seeing a batch of product, arsenic I mentioned earlier, coming retired of nan Middle East. They're surely ramping up successful Jizan. They're ramping up successful Azure. They've besides benignant of accrued their accumulation successful West Coast India.

And of course, pinch nan precocious processing that we've seen successful China, I deliberation nan exports going to Europe that has trebled conscionable this twelvemonth alone. So we're seeing a batch of volume. It's not only going to Europe. It's besides a batch of it's going down to Australia, arsenic we mentioned before, a batch of it is besides going to South America. We're seeing volumes going long-haul longer haul than we've seen earlier going into Western Africa arsenic well. So successful position of ton miles, it's not only is it defined by nan truth of preparing ourselves for nan prohibition station 5th of February, but it is fundamentals astir nan globe that location is benignant of pushing this marketplace into this awesome strength.

Frode Morkedal

Yes. That's bully color. I conjecture connected nan ballast length, I conjecture astatine slightest nan Russian products could beryllium based on to beryllium -- person to beryllium moving connected much inefficient information voyage basis. What do you think?

Lars Dencker Nielsen

Well, travel nan 5th of February, and obviously, this is what we presume is that nan acheronian fleet arsenic what's been called now, will beryllium moving this merchandise further afield arsenic well. They would -- because they're only going to beryllium doing Russian, they'll beryllium ballasting back. So that is inefficient utilization of that peculiar fleet, which, of course, surely intends that your utilization of nan normal fleet will summation and will fundamentally statement nan proviso overall.

Frode Morkedal

Perfect. Thank you. That's all.

Operator

Our adjacent mobility comes from Ben Nolan from Stifel. Please spell up pinch your question.

Benjamin Nolan

Hey, guys. Good update. Appreciate it. Robert, you had mentioned that astatine this point, you guys are already opening to hole spot into 1Q. Just funny if you tin possibly framework successful really overmuch of 1Q you already person booked, and are they nan benignant of nan complaint levels that you person laid retired successful nan property merchandise there?

Robert Bugbee

Well, nan complaint -- we haven't guided to really much, truthful I can't do that. But nan rate, what I could opportunity is we could infer that they would beryllium astatine nan -- up until Friday we closed down connected Friday that you would infer that fundamentally a batch of nan fixtures that were done betwixt December 1 and past Friday astatine those averages, you tin spot of $90,000, $75,000, $55,000 would beryllium the, let's say, nan starting rates of Q1.

Right now, this week, if you're talking astir an LR2 that fits benignant of longer voyages further forward, they're going to beryllium starting -- you're starting now putting fixes successful nan books for this week that aren't successful those calculations there. Those calculations only went up to past Friday, arsenic Lars is saying immoderate of nan fixes are going successful astatine positive $100,000.

So and arsenic you chop done each week, much and much of nan voyages spell into Q1. So basically, by nan extremity of December, extremity of this year, you would person decidedly had, let's say, nan first 3 weeks of Q1 booked which connected nan coming rates, conscionable deliberation what those first 3 weeks could beryllium astatine coming rates, those 3 weeks, you could virtually gain what you earned successful nan 3rd and nan 4th fourth successful nan first 3 weeks. By nan clip you get to everyone comes backmost connected January 10, you'll person 33% to 35% of nan full first 4th book.

That I think, is what's ace breathtaking is that these rates are truthful precocious and person specified extent and breadth that they person an contiguous effect related to your net and your rate position connected your equilibrium sheet. So I would conscionable opportunity you tin count it backwards. If it's 33% by, let's say, January 10, past if you chop backmost a week, past return distant 8% from that, chop backmost a week again, different 7%, 8%, that's really to astir cipher bookings forward.

Benjamin Nolan

Okay. That's adjuvant color. And past arsenic it relates to conscionable benignant of nan marketplace and appreciating that arsenic Lars you laid out, nan February sanctions that could beryllium a catalyst aliases create inefficiencies that efficaciously shrink nan size of nan fleet. How should we deliberation astir adjacent year's refinery attraction play aliases turnaround season, that benignant of coincides pinch -- we're beautiful adjacent to erstwhile nan sanctions are coming in. I mean really does that -- I don't know, really do you quadrate nan circle connected really each of those things are going to run simultaneously.

Lars Dencker Nielsen

Well, if we look astatine 2022 successful position of what that seasonality meant, erstwhile it comes to refinery turnarounds, we had afloat steam up successful nan 2nd quarter, nan 3rd quarter, which tends to beryllium nan strongest portion of refinery attraction period. I deliberation we're down to 2.2 cardinal barrels. That outage successful December for this period compared to October was 7.6% and successful October, nan marketplace was besides conscionable arsenic strong. I deliberation that nan underlying constituent of what we're seeing coming pinch capacity utilization, theoretically is truthful precocious now that pinch nary benignant of extenuating type of bottlenecks. So this is structural.

So successful position of saying that there's a refiner that has to spell into turnaround, they will person to proviso them pinch a smaller fleet of ships disposable to them and return that further afield. And I only spot that this marketplace will benignant of thrust done immoderate benignant of seasonality successful position of refinery attraction and support its strength.

Benjamin Nolan

Okay, each right. Appreciate. Thanks Lars.

Operator

Our adjacent mobility comes from Ken Hoexter from Bank of America Merrill Lynch. Please spell up pinch your question.

Ken Hoexter

Hey, Great. Congrats connected yet getting to this constituent moving done what was surely a longer downturn than you thought. I guess, Robert, does nan liking -- if you're getting truthful overmuch liking successful clip charter outs and you support pushing it off, and rates support going up too, does that ever move into orders from nan major? Maybe talk astir nan costs of newbuild details? I cognize there's not overmuch of an bid book, but what's going connected successful nan marketplace now? I conjecture I'm -- successful our analytical view, erstwhile things are excessively good, thing typically goes wrong.

Robert Bugbee

Yes, I deliberation that's a awesome question. I deliberation astatine nan moment, it's successful an okay place. It's really successful an okay spot for a awesome -- they've been capable to return -- there's capable of nan discount successful nan clip charter rate, whether it's 1 year. I mean 1 twelvemonth LR2, I deliberation Lars was telling maine this greeting is successful $50,000, $55,000 a day. So astatine each points, nan $50,000, $55,000 aliases nan 3 twelvemonth rates, et cetera. The charterer is getting benignant of a profit connected nan first portion of it. So that's benignant of a comforting thing, to unafraid tonnage for a play while getting a profit connected an highly beardown market.

So they're capable to get sum erstwhile they are short tonnage astatine immoderate benignant of coming rate flow. Whereas, if they were to construe that into a newbuilding, they're not doing anything. They're not getting that vessel for years. It doesn't do thing to alleviate nan problem astatine nan present, and they person rate out. The further down nan curve, you get nan much uncertain, aliases everyone were discounted, and they've conscionable near themselves massively exposed to nan front.

So unless Lars has thing other to add, having worked for a major, nan calculation correct now is what we're happy to do a 3 twelvemonth charter if we can. And why would we spell upstairs and bid thing astatine grounds prices for thing successful nan early that does not thief an highly stressed position successful nan present.

Ken Hoexter

Yes. Makes a batch of sense. James, you talked astir nan opportunity to return down indebtedness faster, obviously. I deliberation you primitively were, I deliberation thing for illustration $300 million, now you're talking nan rate travel tin beryllium up to $1.3 billion. Are location immoderate constraints arsenic you look into adjacent twelvemonth connected what you tin tie down? And past Robert, we typically -- you ever show america to hold until Thanksgiving and spot what's going connected pinch rates. Obviously, this looks conscionable wholly different than a normal calendar. So possibly is location thing connected nan sky that seasonally switches this? Or is it conscionable going into refinery attraction that you were conscionable talking about? What changes nan benignant of tally present seasonally?

Robert Bugbee

James, if you want to spell first and Lars and I play nan second…?

James Doyle

Sure. So Ken, we did six much leases for nan extremity of this year. We still person astir apt 60 vessels aliases much that are nether leases. So there's decidedly much to do. Recently, we've been doing it done rate flow. And obviously, complete nan adjacent year, we'll person caller loans arsenic these vessels are unencumbered, and we tin tie down connected those loans and past accelerate those repurchases. Obviously, nan financing successful position of nan commercialized slope loans are really attractive. And truthful we're going to proceed to look to do that. And past astatine immoderate constituent adjacent year, you'll commencement to spot nan effect connected benignant of little liking and main breakevens, which we're really looking guardant to.

Robert Bugbee

When it comes to nan rates correct now, erstwhile I look astatine it, it's very difficult to -- you tin deliberation of things that are going to push nan rates moreover higher, specified arsenic nan February 5 business because successful products, it's benignant of possibly moreover much wacky than crude because location isn't truthful overmuch of a acheronian fleet successful products. And moreover if successful nan acheronian fleet itself is apt to beryllium -- it's not for illustration they're going to beryllium taking products to China aliases products to India successful nan aforesaid measurement nan crude lipid marketplace is. They're going to beryllium taking products to South America aliases points successful Africa, truthful immense agelong distances that's going to occur.

But these are each things that we tin conscionable create moreover much bullish constructs. And you tin spot from what we're talking astir now, we benignant of don't request that. The marketplace is already -- it's moved from, I mean bullish is now excessively anemic a connection for it. I mean, I don't cognize really to picture thing that's moved from bullish to very bullish to reddish hot. I mean, achromatic hot. I don't cognize what's aft that. And it's very difficult now you've sewage winter. We really sewage a wintertime now successful nan Northern Hemisphere.

And I deliberation that that's putting a cheque into because we've seen nan effort to inventory building. We've seen state being built. We've seen immoderate shape of power complacency contempt nan truth that world inventories are low. And past suddenly, you're getting this daze coming successful pinch utmost cold. So because of nan play itself, thing to do pinch Russia, because of nan play itself and nan existent capacity of nan proviso broadside capacity astatine nan moment, it is difficult to deliberation that this marketplace is going to beryllium thing but beardown for this benignant of -- during its normal seasonal period, which would usually past each nan measurement done to -- pinch a small spot of a hiccup pinch refinery attraction done tell, let's say, early mid-June.

Ken Hoexter

Wonderful. Hey, Robert and James. Thanks truthful overmuch for that. Appreciate it.

Operator

Our adjacent mobility comes from Greg Lewis from BTIG. Please spell up pinch your question.

Greg Lewis

Hey, convey you, and bully greeting everybody, and acknowledgment for nan update. James, I did person a mobility astir nan 4th fourth percent of days fixed -- and benignant of really what I'm looking for are for illustration arsenic we deliberation astir scheme days and possibly immoderate unplanned days for nan quarter, is location immoderate benignant of guidance you tin springiness america location successful position of arsenic we deliberation astir full gross days for nan quarter? And past besides pinch that, sometimes we spot for illustration a ballast limb of a vessel. We spot that a batch successful crude wherever possibly it's not -- ends up being for illustration immoderate zero gross days. Could you supply america immoderate colour astir that conscionable arsenic -- I deliberation that would beryllium helpful?

James Doyle

Yes. So location was immoderate further off-hire days and those were updated successful nan MRs. So those came down, and that's because nan barren docks are taking a small spot longer owed to COVID restrictions successful China.

In position of rates generally, I deliberation what we see, which is astir apt a small spot different than crude and astir apt mutes this a small spot much is nan triangulation. And nan triangulation connected nan MRs is evidently beautiful good known, wherever it's very astonishing now is what Lars and his squad has been capable to do connected nan LR2s. And I'll fto him speak to that. But what you person is an unthinkable magnitude of distillate that needs to spell from Asia to nan West. And truthful it's creating immoderate very, very bully backhauls. And it's besides benefiting nan MRs arsenic well.

And that's really erstwhile you look astatine benignant of benchmark rates and wherever we are, really we're benefiting from that. I deliberation if you look astatine what we're doing now successful nan existent update, you're seeing nan use of that triangulation. And that's astir apt nan biggest quality compared to crude.

Greg Lewis

Great. And past I did person a question. As we spot much realizing that nan MR marketplace successful nan Atlantic Basin tends to really be, we hole it and we get to work. As we spot much cargoes aliases loadings retired of nan Middle East, arsenic those refinery runs -- arsenic their refinery volumes increase. is location immoderate measurement and I think, Robert, you touched connected it a small bit, nan measurement to limb [ph] arsenic we deliberation astir fixing forward, i.e. aliases we look astatine coming connected -- today's mid-December, is benignant of nan existent loading clip for that alloy that's fixed today? Is that benignant of 7 to 10 days? Is that for illustration a 7 to 10 days up of its existent loading and starting to recognize that rate? Is that benignant of a adjacent aliases a unsmooth measurement to deliberation astir it?

Robert Bugbee

So Lars, why don't you talk a small spot now…?

Lars Dencker Nielsen

Yes. I'll commencement pinch -- look, Greg, connected an MR, it's 7 to 10 days. It tin beryllium -- it tin alteration a small spot depending if it's eastbound aliases westbound aliases it's nan U.S. Gulf and nan U.S. Gulf tends to beryllium moreover shorter than that, could beryllium 3 to 5 days. When it comes to MR2s, it tends to beryllium anyplace betwixt 2 weeks to 3 weeks out, depending connected wherever that peculiar debased larboard is, but chiefly for nan Middle East, it will beryllium two, 3 weeks out, astir apt 2 weeks erstwhile it comes for North Asia, and it is simply a small spot much tricky erstwhile it comes to loading retired of Australia pinch nan condensates wherever that tin beryllium besides moreover further out, and you request to make judge that you person capable ships location to benignant of support nan precocious cans. But that's astir right.

Greg Lewis

Okay. Great. And past I conscionable did person 1 different question, conscionable arsenic we deliberation astir it, everybody is seeing nan effect of nan crude lipid embargo successful nan Turkish rates and nan locking up aliases I conjecture nan authorities are trying to beryllium retired wherever that crude connected those vessels was originated from. As we deliberation astir nan merchandise marketplace and nan upcoming embargo of -- that's taking clasp successful early February. Everyone knows nan header numbers of Russian refined products, seaborne exports. Any benignant of unsmooth guidance aliases you could talk astir successful position of what's coming from that region arsenic opposed to what's coming retired of nan Baltic?

Robert Bugbee

First of all, there's much merchandise coming retired of nan Baltic than retired of nan Black Sea. My first constituent -- nan first constituent successful position of nan issues astir Turkish Straits, it is -- astatine slightest to my knowledge, now has been sorted retired present pinch nan P&I clubs pinch a wording that has been adapted aliases adopted by nan different players, and ships are now transiting through.

And nan funny point is, it was much because of nan vessels loading retired of benignant of CPC pinch nan Kazakh crude, which, of course, is not sanctioned, making judge that, that P&I sum was successful place. And we person seen now that, that has now sorted out. When it comes to nan volumes retired of nan Black Sea, station 5th of February, it's a very, very bully question. It surely is each down to what proviso of ships is disposable successful nan acheronian fleet to beryllium capable to move it because they were trying to do immoderate they tin to maximize that, but I deliberation they're going to person an rumor pinch uncovering capable ships to do so.

Greg Lewis

Okay, ace adjuvant everybody. Thanks, and if you are connected larboard you person a awesome holiday.

Robert Bugbee

Thank you.

Operator

Ladies and gentlemen, pinch that, we'll reason today's question-and-answer session. I'd for illustration to move nan level backmost complete to A - Robert Bugbee for closing remarks.

Robert Bugbee

Thank you. Thank you very much, everybody. I'd conscionable for illustration to screen thing that wasn't covered. I mean, we've been bullish. We've been very bullish, and we moreover talked connected nan past convention telephone astir $82 NAV by nan extremity of March. Clearly, we haven't been bullish enough. I mean this is -- we conscionable want to service successful a measurement it comes for you guys that, wow, this is particularly now pinch nan acold coming successful and nan various authorities policies are conscionable continuing to tally down nan inventories and not instrumentality either driving velocity limits, et cetera, you're creating an amazingly tight marketplace here. And that $82 a stock NAV is nary longer optimistic.

It's nary longer moreover that bullish. It's accelerated becoming a reality and very quickly becoming a reality. So I cognize we haven't talked astir it overmuch connected nan call, but you've sewage 2 things coming in. It's not conscionable nan earnings, it's nan worth too. So it's a awesome position. We wish you each a very happy holidays, and convey you again very overmuch for your support and your trust. Thanks.

Operator

Ladies and gentlemen, that will reason today's convention telephone and presentation. We do convey you for joining. You whitethorn now disconnect your lines.