Stolt-Nielsen is set to release their second-quarter figures next Thursday, covering the period from March to May. Although there has been a decrease in chemical tanker rates, recent trends indicate a potential reversal, influenced by a weaker US dollar and ongoing tensions between Israel and Iran. Despite this uncertainty, we maintain a Buy recommendation with a revised target price of NOK 320 per share, following a slight increase in the stock price. The company anticipates a 2% to 5% decline in daily average time charter equivalent (TCE) earnings for the second quarter of 2025.
Based on this forecast, we adopted the midpoint for our estimates and observed that the official chemical tanker rates are aligning with this anticipated trend. We expect a similar quarterly earnings before interest and taxes (EBIT) result, but predict the bottom line will decrease to approximately USD 60 million. Geopolitical tensions, particularly the Israel-Iran conflict and related US military actions, have created significant disruptions in shipping routes through the Strait of Hormuz, a crucial area for global oil supply. This escalation has led to heightened oil prices, which temporarily raised bunker costs and TCE rates, although the impact on chemical tankers has been less pronounced than on oil tankers.
While tensions in the region appear to be easing, the risk of renewed conflict remains. Early violations of ceasefire agreements highlight the ongoing instability, suggesting that discussions surrounding fleet resilience and energy security in long-term charter contracts may be prompted. Additionally, the strength of the US dollar is being challenged as uncertainties regarding policy under the Trump administration emerge, coupled with deteriorating fiscal conditions. These factors have contributed to the dollar’s weakening against the Norwegian krone, prompting our reduction of the target price to NOK 320 per share, down from NOK 330 per share.
Nonetheless, this minor adjustment still supports our Buy recommendation for Stolt-Nielsen stock.