Company: ASC
Filing Date: 2025-03-07
Form Type: 20-F
Source: 0001558370-25-002500
Chunk: 66

Company: Ardmore Shipping Corp
Filing Date: 2025-03-07
Form: 20-F
Item: Item 4
Chunk 66
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 supporting the product tanker freight rates. The imposition of a price cap on Russian crude oil and refined products led to Russian refined products flowing towards alternative destinations like Turkey and Brazil, deviating from their previously established routes. This shift in trade patterns resulted in a surge in tonne-mile demand. In 2023, increased oil demand also supported freight rates.

The outbreak of COVID-19 in 2020 caused unprecedented turbulence, with lockdown measures leading to a sharp drop in oil demand and limited onshore storage capacity. This resulted in a surge in demand for tankers as floating storage, temporarily boosting freight rates. However, as crude production cuts took effect and refinery activity slowed, vessel earnings declined, particularly as ships previously used for storage re-entered the trading fleet.

In preceding years, freight rates were influenced by inventory de-stocking, shifting trade flows, and regulatory changes. The introduction of IMO 2020 regulations contributed to a surge in diesel trade, while geopolitical events, such as U. S. sanctions on key shipping entities, led to temporary capacity constraints and upward pressure on product tanker rates. The interplay of these factors has shaped tanker earnings, with periods of volatility driven by supply-demand imbalances, trade disruptions, and regulatory developments.

The chart below illustrates the trend in MR spot and time charter rates from January 2015 to December 2024.

Table of Contents

MR Product Tanker Freight Rates

(U. S.$ Per Day)

Source: Drewry, Note - 1 Year Timecharter rates are for Eco MR vessels

Asset values

Between 2003 and early 2008, newbuilding prices increased significantly, primarily driven by increased tanker demand and rising freight rates. After reaching a peak in 2008, newbuild prices largely followed a declining trend during 2008-2020 due to lower tanker demand and the fall in freight rates.

Newbuild prices started to increase in 2021, fueled by the increased bargaining power of shipyards with excess orders from other shipping sectors. This trend continued in 2022 due to higher costs of raw materials and limited shipyard slots. In 2023, a sustained rise in newbuilding prices for MR vessels was observed, primarily driven by increased labor costs and high inflation. Increased tonnage utilization of yards also supported this upward trend. In 2024, newbuilding prices surged, reaching an all-time high in October. However, asset prices have since softened due to an unconventional winter market for product tankers, where freight rates failed to rise, impacting asset values. In