Stolt-Nielsen is set to release its first-quarter figures for the period from December to February next Thursday. During this timeframe, chemical tanker rates experienced a decline, coupled with a weaker US dollar. A significant factor contributing to this trend was the proposed USTR levies targeting Chinese-made ships and their owners. This proposal has sparked concerns reminiscent of apocalyptic references, leading to speculation about the potential impact of these tariffs.
Although the tariffs have not yet been implemented, ongoing hearings and letters from major trade organizations heighten the risk. In light of these developments, Stolt-Nielsen has adjusted its target price to NOK 340 per share while maintaining a ‘Buy’ rating following a sharp drop in the stock price. The company had previously indicated a decline of 7.5% to 10% in daily average Time Charter Equivalent (TCE) earnings for the first quarter of 2025. After reviewing regional chemical tanker rates, the midpoint of this estimate seems valid, as confirmed by recent data.
Though the projected bottom line of around USD 70 million is solid in any normal context, it falls short of the higher standards set in recent years. Additionally, at the end of February, the U.S. government proposed imposing a fee up to USD 1.5 million on Chinese-built vessels entering U.S. ports. This fee would also extend to vessels owned or operated by international companies with any links to Chinese-built ships. Such levies would significantly increase shipping costs, potentially raising daily expenses for chemical tankers by USD 15,000 to 25,000.
Even at the lowest fee tier, this could lead to a substantial rate increase, potentially deterring customers. As of now, official confirmation of these levies is pending, and insights from Stolt-Nielsen during their upcoming presentation may clarify the situation. For now, despite the uncertainties, the ‘Buy’ rating persists as the company adjusts to the market changes.