d'Amico International Shipping S.A.

Good afternoon, this is the Coruscall conference operator. Welcome and thank you for joining the D'Amico International Shipping first quarter 2023 results conference call. As a reminder, all participants are on listen-only mode. After the presentation, there will be a Q&A session. For operator assistance via web call, please press the access icon on the bottom left side of your screen. For conference call assistance, please press star and zero on your telephone. At this time, I would like to turn the conference over to Mr. Paolo D'Amico, Chairman and CEO. Please go ahead, sir.

Thank you. Good afternoon, gentlemen and ladies. Thank you for joining our call with our first quarter result of 2023. I apologize, but this time we are a little bit under pressure because we have a flight to catch in an hour's time, so we must work a little bit on the fast mode. At this point, I leave the floor to my colleague, CFO Carlos Baresa, and please, Carlos, go ahead.

Yes, good afternoon to everyone. Thank you, Paolo. Just as usual, we start with the fleet overview. As in the previous presentation, we control a fleet of 36 vessels. The number of own vessels as of 31st of March was of We had seven bare-board vessels and eight vessels on time charter. This fleet composition actually changed slightly last night, and we now have 22 old vessels and six vessels on bare-board charter as we took delivery of the High Freedom. So... A young fleet still, especially relative to the industry average, an average age of 7.9 years, whilst for the industry the average age for the Amazes of 12.7 and for the other ones it's almost 14 years. Large proportion of echo vessels, so 79% of own and wearable and 78% of the entire fleet, Going on to the following page, in terms of CAPEX commitments, nothing new to report here. We include the High Explorer as part of our investments for $23, $30 million, earmarked for that delivery of the vessel now expected at the end of May. And the maintenance complex for the year is still expected at 14.5 million overall, of which already 4.8 were spent and another 9.7 anticipated for the rest of the year. It involves 10 vessels stopping for dry dock in 23, which is a big number relative to our fleet. And therefore, years where the maintenance cap is anticipated to be much lower, especially 2024. In terms of the investments for 2023, it does include also the installation of two scrappers on two of our other ones. Going on to the following page. In terms of repayments on our back debt, good to highlight that we don't have any more balloons to refinance until 2025. And the only balloon that we have to refinance in 2025 is in relation to one vessel for an amount of around $11 million. We had a balloon in 24 for one of our vessels, the Cielo di Londa, that we reimbursed already this year in April. And we are going to be refurbishing this vessel, expecting to draw down the new facility around the end of June, beginning of July. But we are progressing well. to be able to draw down this facility by that date. On the right-hand side, we show how the daily repayments on our loans have been declining quite rapidly. The future declines are going to be driven mostly by the exercise of the purchase at least initially, and therefore that will hopefully contribute meaningfully to reduce our P&L and cash break events going forward, partly compensating some of the cost pressures that we are seeing in other areas of our business, as you will see later. Going on to the following slide, page 10, here we show the purchase options on these vessels. On the top of the page, we show those which were already exercised. So we see that the trust and the trader, which we recently announced that we that we have exercised, and we expect these vessels to be delivered to us around mid-July. And on the bottom, those which were still not exercised, the high loyalty most likely will be exercised in the coming weeks. And then we have the fidelity of discovery. which were vessels that we refinanced recently through new leasing transactions. So the discovery can be exercised already by September 24. And then there is the Cello di Husson, which is the JOCO, and that one is a bit less flexible as a transaction. The first exercise date is March 24, and if we don't exercise in that window, we have to wait until September 25 when we effectively have a purchase obligation. So we anticipate to continue gradually exercising these options on the remaining options of these lease vessels. Of course, it will depend on the – on the market developments, but we are very positive in that respect. So we expect to have ample availability of resources to be able to exercise these options. Going on to the following page, we show the time chart of the in-vessels. Nothing new to report here. We have exercised the adventurer and the explorer. The explorer, as I mentioned just now, is going to be delivered to us around the end of May. The other options are also in the money, to a lesser extent than the adventurer and explorer were. But since Tesla values seem to continue moving up, They are becoming increasingly interesting and most likely as we arrive closer to the end of these time chartering contracts, the exercise of these options will be reconsidered, especially if we are still in a very strong market. and we are likely to be exercising some of these options too in the future, therefore. Going on to the following page in terms of coverage, we have had some success here in covering some of our vessels. and we are now 24% covered for the rest of 2023 at an average rate of just over $29,000 per day. The coverage does fall quite rapidly in 2024, but I'd like to highlight here that we have covered one of our vessels recently, an ECOMR vessel for 32 months. So just over two years and a half. at a very attractive rate. So there is also interest from charters for longer contracts now, which demonstrates that the players anticipate this market to last for quite some time. Going on to the following page, we provide an outlook of the earnings in the current quarter, which despite volatility has been so far quite a strong quarter. The days fixed on the spot vessels represented 44% of our total available days for the quarter at an average rate of just over 34,000. And the TC contracts for the quarter represent 27% of our available days in the quarter at an average rate of just over 29,000, giving a blended rate of almost 32,300 for 71% of the available vessel days. Which means that even if we were to earn only 20,000 on the remaining three days, our blended rate for the quarter would be of around 28,700. If instead on the three days we were to achieve an average rate of 30,000, our blended rate for the quarter would be around 31,600. So we are here not providing any guidance as to what we expect the rate on the remaining three days to be, but we are just providing the tools to our investors and to the analysts so that they can then make their own calculations and assumptions in this respect. Going on to the following page, we take a slightly longer-term view on our results. At the bottom left, we show our potential recurring results in 2023, making an assumption of an overall breakeven of $15,000 per day for 2023. Given the contracts already in place, given the vessels already fixed on the spot market also, the result, the recurring results would be of around $112 million if we were to break even on the remaining three days. However, if we were to earn on average $20,000 per day on the remaining three days, overall results, net results for 2023 would be of a net profit of $138 million. And in case the average earnings on the remaining three days were of $30,000 per day, these results would be closer to $200 million. So this gives you an idea of the profit potential for the company for the full year 23 and for the coming two years. Going on to the following page, here we look at our costs. As anticipated in our previous calls, the dynamics here, are not as favorable as they were after successfully reducing these costs since 2018 and then keeping them under control over the course of the last few years. We have experienced significant inflationary pressures over the course of 2022, which have then led to this increase in costs in the first quarter of this year. The main items which have contributed to this increase have been crew costs, increasing crew costs, and an increase in insurance costs as, of course, because of the sharp increase in asset values, we have also realigned our coverage to cover our vessels at these higher values. leading to an increase in the premiums that we have to pay to our insurance companies. There were also, of course, some currency effects which impacted this cost. They have been more significant in relation to our G&A, where 75% of our costs are in currency which are different from the U.S. dollar. There were also, in terms of GNA, upward pressures because of the variable compensation component. Of course, this is linked to the very strong results that we have achieved last year and that we anticipate to receive this year. And in a weaker market, part of these increases are therefore expected to unwind. And, yeah, I would say that those are the main items. Of course, there's more traveling which is happening that is not as an important factor. we mentioned, but traveling activity has resumed in full also for us this year and already in the course of 2022, and that also is contributing to some upward pressure on the GNA costs. Going on to the following page, we show a quick glance at the the key indicators relating to our balance sheet. The ratio between the net financial position and the feed market value improved further, decreasing from 36% to 27%. 36% at the end of last year, so 27% at the end of the first quarter. We'd like to Remember that this ratio was at 73% at the end of 2018. So this is a very big improvement that we managed to achieve and that leaves us in a very strong position currently. And we expect this ratio to improve further in the coming quarters. given the strong prospects for the market. We ended the quarter also with $155 million in cash. We generated a very strong EBITDA in the first quarter of $76 million, but also as anticipated, our cash flow generation, cash flow from operations in the quarter was actually even stronger. It was over $99 million. because we had some positive working capital effects, and we had discussed these in our previous call in relation to our full year 2022 results. Looking at going on to the following page, the key points, The key line items of our P&L, the net profit for the first quarter was of 54 million, excluding non-recurring items, it was of 56.5 relative to a loss of 6.5 million in the first quarter of last year. So, of course, a very strong improvement. Going on to the following page on the daily TCE spot, the average was for the first quarter 36.7, 700. And that is... weaker than Q4 last year, which was exceptionally strong, but it's pretty much aligned with Q2 last year, where the average was just above 37,000, and it is stronger than Q2 last year. So it's still a very good result. And as we showed you Just now Q2 has been so far also very strong. I pass it over to Paolo for the market overview.

Thank you, Carlos. Here we have our usual slide. According to GARPS, the one-year time chart for an Echo MR today is $32,250, and for an LR1, $41,000 per day. So in a market which is absolutely volatile, and I have to say, in the first quarter, things have been, at the beginning, a little bit complicated. As Carlo said before, looking at the results, we can easily say we did very well. And, of course, there is this element of the crisis in Ukraine, which is playing a major game. Since the European sanctions, Russian exports to Europe basically disappeared, but they increased tremendously to other countries like India, China, Turkey, West Africa, Brazil, and Middle East. We can say that in terms of volume, the Russians, they even improved the quantities traded. they certainly earn less money, but the volumes were on the rising side. All this will increase the volume of the so-called rush to trade, which I like to remember it is partially sanctioned and partially is not, because if you trade within the price cap, You can't trade to Russia. We are not doing it, but there are people, colleagues doing it. This is creating a very strong demand of ships for this trade. And they are going, ships that they are taking from the same, the non-sanctioned trade, the trade that we are doing, So reducing our supply on one side and moving it to the Russian side of the market. This in, let's say, the medium to long term could even improve our fundamentals, which are, to my mind, extremely good still today. We had some production casts done by by Russians first and then from all countries of accrued and these production costs should, considering that we, the world consumption should be staying around the 100 and 1 million barrel per day, should bring to a deficit in the second half of the year. The throughput from the refineries is recovering again from the COVID situation. The last one who is coming back to the market is China. they are increasing a lot their capacity, and even with the slowdowns which are expected, we see an increase on the throughput worldwide. The inventories are at a very low level. And what we are seeing, and this is probably a feeling of the possibility of a recession, or a very light one, the decline in middle-distillate tracks, because consumption of middle-distillate, I would say on diesel, they are going down. But in the meantime, the consumption of gasoline and especially the consumption of jet fuel, they are increasing. Jet fuel is really strongly increasing a lot. This is due to the fact that mostly in the Far East, flights are recovering, the number of flights are increasing, and people are traveling more. Certainly, we have Again, a little bit of a competition from the crude tank market because these gas, they create less demand on the crude tankers. It's nothing that we really worry about because looking at the average rates we are making today, I don't really see any problem. And the change on the refinery landscape is, as I said in previous calls, very much concentrated in the Middle East, Far East, China, and India. And this means the Morton Mile, for supplying the markets in the U.S. and Europe. So even this is a positive element for the demand. Shell oil is improving but is not going to be a game changer because producers are very much focused in payback debt and giving dividend. Where is the Let's say, I think the real fundamental to our industry is on the supply side because we have elements that will be pushing all the vessels to demolition or to slow down. And I'm talking about the intensity indicators that we have, energy efficiency indicators which are coming in force. The pool of demolition candidates is increasing quarter by quarter because the city is aging. And just to give you an idea, if we take the tanker industry as an old, crude and clean, and an old, but then actually more than 10% is over already, is over 20 years of age. So this is... Something that should make us thinking on how tight the supply is going to be in the future. If you want to build a new ship today, you're not going to see that before 2025, 2020, or 2026. So it's very much down the road. When you build a company, are extremely high and this is stopping, of course, any sort of speculative order. And the final result of this is that the fleet growth is basically close to zero. So looking, starting from the supply side, our fundamentals are extremely strong. We put the demand, which is there, and which is requiring longer routes, so more town mines. I can say that even in a very volatile world, even with the uncertainty of due to possible recession or not, I mean, I think that we are, we certainly are, and I think we will stay in a positive ground for quite a while. Thank you, Paolo.

The last slide here we usually cover in the presentation, which is the one relating to the NAV. Our NAV, since the end of last year, rose from around $740 million to almost $810 million. On a per share basis, it rose from That represented, as at the end of March, a discount of 23% to NAV, based on where our share price was trading then, but based on where our share price is trading today, the discount is closer to 40% to NAV, which is, once again, an enormous discount. and our share price today is actually trading pretty much in line, very small discount to our book value, which we think doesn't make too much sense. We are, once again, very cheap relative to our fundamentals. I mean, our book value reflects vessels, which prices for vessels which were bought at really the bottom, unlikely to ever see again given the inflationary dynamics of the last few years. So that really represents an absolute minimum at which we should be trading, and it would only be justified if we anticipated a very negative scenario going forward, which is not the case. because the markets are still very strong and despite some headwinds on the macroeconomic front, there are many other aspects which will be supporting the market as Paulo covered and therefore we do still expect the markets to be very strong in the coming quarters and years. I pass it over to you for the Q&A session.

This is the course call conference operator. We will now begin the question and answer session. To enter the queue for questions, please click on the Q&A icon on the left side of the screen and then press your raise your hand button. Please not mute your microphone locally and when prompt, make sure you turn on your webcam in the pop-up window. If you are on the phone instead, please press star and one on your keypad. The first question is from Matteo Bonizzoni of Kepler Chevreux. Please go ahead.

Thank you. Good afternoon. I have two questions. The first one relates to the volatility of the spot rate, which we have observed here to date, and also, I would say, some swings in the refining margin. So the spot rates were softening a little bit in January, refining correctly, then strengthening again. significantly in February, but then from the public information which we receive currently, we are around half of the level which you posted as an average in Q1. So there has been a significant correction. And also if you look at the refining margins that have been, for example, the results of SARS, but also other refineries, starting from April, the level of the refining margin has significantly corrected in particular as regards diesel, which proved very strong for a number of months, and now it has significantly corrected in the last month or month and a half. So how do you see this situation? Can you provide a little bit of color on this volatility? Your expectations in the mid-term remain positive, but just to know your view on this kind of movement, and if there could be another maybe strengthening from this level, which we have seen as of late. The second question is more a numerical question. Putting the figure in the MoNIC cell, I could not reconcile some data which you provided. So if I put a fleet market value of 1037 and a net financial position XIFI 16 of 316, I get a loan-to-value of 30.5% and not 27.2% which you disclosed. To get that kind of loan-to-value, I would need to assume a fleet market value significantly above what you disclosed, in the region of one, one, six, zero. So just to check if I'm missing something or if there is some delta.

Thanks. Okay. I pick up the first one. I mean, we have to face it. We are in the slowdown. I mean, we cannot say that nothing is happening. And also the fact that the refining margins of diesel, and you know that diesel is the fuel of the economy, so it reflects, frankly, of the number of containers that they are moving less in the States, and the relative tracking, which is not needed anymore. Of course, the diesel is in a weak position. But this doesn't change for us too much because, as I said, the jet fuel is growing a lot. And we move from one commodity to another one. So, yes, we are related, of course, to the energy world, but not as strong as many people think. So this is what happened. As far as the rates, yes, the rate went down, but we have also to do analysis in the sense that you have the Atlantic Basin, which is paying by far less than the Far East. The Far East is tightening a lot. This is why, because you have these strong movements of diesel from Far Eastern refineries going to Europe and going west. So you have an increased movement of the fleets going west and increasing the supply on the west side and decreasing the supply on the east side. Thanks God, our exposure on the west side is extremely limited We tried to avoid to go west when everybody was going west. And so, yes, from a general, let's say, look, the rates, they lost ground. But if you go in a deeper analysis, in the east, we are still running around $30,000 a day. which is not far away from the numbers that Carlos was telling you about for Q1. I hope this helps you.

Yeah. No, I'd just like to add a few things to what Paolo said, and then I will also answer the other question. It is true that the refining margins have come down, and as we showed here, but these are cracks for assuming you're buying Brent, okay? I mean, but... As we know, a lot of refineries in Asia today, especially in India and China, are buying very cheap Russian crude. These are also more modern refineries. And the margins that they are making are completely different from the margins that refineries in Europe are. And shipping, I would say, is driven by, you know, on the demand side by two main factors. One is the demand for the final product, so how, you know, if volumes are consumed increase indirectly, that will throw through to a greater need for transportation. But arbitrages are very important, and dislocation of refiners is very important. So this environment in which we are in, where you have refineries in one part of the world which are earning margins which are completely different from refineries in the rest of the world, creates huge from the east to the west. And that is what Paolo was referring to. That is the reason why a lot of vessels so weak in the west right now, one of the reasons, and it is very strong instead in the east. But this environment is very positive to us. There's a difference in margins in these two different places. And this is something that we have been talking about for a long time, that was going to happen in any case. even without the worm, because there was this location of refineries, as even without the cheaper product that they are buying today from Russia, the refineries in Asia and in the Middle East that are being built They are more modern refineries. They can deeper conversion refineries. They can produce more of the higher value-added products. And they were driving out the cannibalizing the production of of the older refineries in Europe. That trend accelerated during COVID, and it will accelerate further in the coming years. Because as you saw in our presentation, over the next two, two and a half years, there are 7.3 million barrels per day of additional refinery capacity that is going to come online. And where is that refinery capacity coming online? In India. China and in the Middle East. So these refineries, for different reasons, are going to be gaining market share, and this is going to be contributing to ton miles and helping our markets. So I think that that is very important to keep in mind. In relation to the other question, if we look at our financial position, we have a slide in the presentation excluding IFRS 16, it's actually of $282 million. As you see here, it's $360 million including IFRS 16, 282 excluding feed market value of just over 1 billion and the ratio is 27%.

The next question is from Massimo Bonisoli of Equitar. Please go ahead. Mr. Bonisoli, your line is open.

Yes. Can you hear me now? Yes. Good. Good afternoon. Thank you for the presentation. I have two questions. One is on the price of older vessels on page 20. They increased faster than the newer vessel, if I got correctly. It is even more evident if we look at 20 years old vessels. I just want to understand your opinion on the implication. Does it imply that the scrappage rate will decline going forward and older vessels may remain on the market? Or am I wrong in that? The second question is on the cost increase on page 15. If you can provide some indication on the inflation cost effect for the full year on 2023. Thank you.

Again, I pick up the first one. From a theoretical point of view, if you have a supply of new vessels which is basically blocked, freeze, and you have a current fleet going on, of course, the age of the vessel will increase. So already, historically, the product carriers, due to the fact that they are built with coatings which protects them from corrosion and so on and so forth, they are, let's say, They live longer than a normal crew or tanker, and they, let's say, go scrap around 25 years of age. The point is the commercial use of the ship, because already over 20 years, already over 15 years, you have chapters, take the AAA, let's say, so the Severance, the Excellence, and so on. They are not chartering them. And you're already moving to traders. And then going over 20, you have another line of charters who are not taking them. So, of course, more you go ahead and more these ships are going to be excluded. What happens to the market? The market, of course, has to pay more. and will be an equilibrium, a need at a certain point of substitution beyond a fleet. We hope that we will see some period business which will help us to substitute the vessel on the long term, also because the risk is that the top charters, again, the Chevrons, the Exxon, and so on, they risk to find themselves without availability of ships because the number is there and you can't. You have to add another thing, which is the more or less sanctioned trade with Russia. I mean, the Many owners, unknown to us at least, have been buying heavily secondhand ships, which, of course, they end up in the Russian trade. But the sanctioned one or the non-sanctioned one, but anyhow, they end up there. For us, and for our market, these ships are like to be demolished because they are going to disappear. They are not coming back to compete with us. And that is another element of reduction of supply. So where we are going to end up with all this, frankly, I have an opinion, but I mean, it's very, very difficult to say. At one point, I think that the top guys, they have to stand there and say, look, we have to do some project here. we are not going to solve the future problem.

I'll answer the other question and also just add a comment in relation to the dynamics for the older vessels. It is not surprising that the older vessels tend to rise by a larger percentage when you have very strong markets. Of course, they discount a lower number of years of cash flows in their valuation, so that there is a very rational reason why they are more sensitive to the current market environment. In this particular case that we are experiencing now, There is an additional reason why these vessels are very much in demand, despite, of course, you know, what we would have expected instead because, I mean, given all the push for ESG, given the fact that these vessels are going to have to be paying more for the CO2 emissions that they're going to be generating because they're going to be generating more CO2 emissions from next year. in European waters, they are hugely in demand because, as Paolo was referring to, they are the vessels which are primarily trading Russian products. And they are being bought by companies which then using them exclusively for such trades. And that is putting a lot of pressure on the S&P market on these vessels, on the prices of these vessels. I imagine that often the buyers of these vessels also have to buy them only with equity. Probably they don't have access to bank financing. They are bought through vehicles which have opaque shareholding structures, but there is an increasing number of vessels which are moving to that trade. And this is something we didn't discuss in the call, but, I mean, the immediate effect of the sanctions that came in on the 5th of February from the European Union were to reduce the number of vessels that were calling Russia because there was an initial, let's say, reaction of prudence even by operators which were calling Russia before. But, of course, that increased the profitability of such trades to the detriment of the profitability of the other trades. So that is probably one of the reasons which explains the volatility and the weakness we are seeing in the spot markets, particularly in the West. of Suez area. But as more vessels migrate to these straits because of these higher profits which are available on these straits, this will tend to self-adjust itself and these abnormal profits which are being earned in these Russian trades by the ship owners are going to diminish most likely, and the freight rates for the other trades are going to increase. So we are going through, I would say, an adjustment phase. For example, one immediate effect which we saw was an increase in Russian exports to Brazil. Now, Brazil used to import a lot of products from the U.S. Gulf, Now it is importing from Russia. It is a longer distance. So if you look at the market as a whole, it is a positive development. But this positive development is being taken advantage of only currently by the owners, which are calling Russia. As more vessels, as I mentioned, move into that trade area, then the rest of the market will also benefit from this. It's also important to note that the vessels which are calling Russia in many cases are trading exclusively sanctioned trades, primarily Russia, and therefore they're extremely inefficient because they are not able to do the usual triangulations that we do, and they have very – long ballast lag, so very unfavorable ballast-to-laden ratios, which reduces their productivity. So that is also good for the market. In relation to the other costs, on the direct operating costs front, our anticipation is that the increased lower than what we experienced on a quarter-on-quarter basis in Q1, which was a 10% increase. It's more likely to be in the 6% to 7% range. Yeah, it's also true that a lot of these costs are front-loaded. And we tend to concentrate a lot of our purchases of spare parts for our vessels in the first few months of the year.

Very clear.

Thank you.

The next question is from Daniele Alibrandi of Stifel. Please go ahead.

Yes, good afternoon. Two questions also on my side. The first one, in relation to the guidance for the coverage this year, which is 20, 30%. This is clear to me, but when looking at 2024, how should we think about the coverage evolving in 2024? Because today is still limited in percent, but at a very interesting rate of 25K. So I was wondering if we can assume it's progressing like in the range we should see this year, or maybe more towards your historical level of 40, 60%. Also, given the comment that you did on the MR book at an interesting rate for 32 months. So this is my first question. And the second question I've seen on the specialized paper that in the last weeks, months, there were some pick up in order book. Do you think this activity is, let's say, still a normal one or you are seeing

Sorry, the last question we couldn't hear. It was not very clear. If you can repeat, please.

Yes. No, the second question was that I saw on the specialized newspapers that the best order has picked up a little bit over the last weeks. So are you seeing an increasing trend of these? Maybe if you can give us some color on that. on these just because of what I read. I mean, if you're seeing a strong pickup or it's just normal activity.

Thank you. Talking about the coverage, normally we start looking at the coverage when we are at the end of the third quarter and entering the fourth one because it's the moment to look at the market. I mean, it's fundamentally better Today we stay where we are. Of course, it was an opportunity as we had this American oil company who took us for close to three years. We did it, but otherwise we gave a look. Going ahead, there are so many variables that we have to see and how we are going to fill the market in October, let's say. to make a decision, and what, of course, will be available there. Fundamentally, for all the reasons that Carlos and myself, we say, I mean, we believe that next year is going to be a reasonable market. I don't want to start speculating on things that are still far away, but, I mean, the numbers today tells us this. So, if... Number one, there is no way today that you can take a cover, a heavy cover for next year on today's market because everybody is looking each other. The stock market is still paying, as I say, still paying very well. So I don't see any reason to move on. We started with 2023 saying we wanted at least a 20% cover, and we did it, and we did it at very good levels. Let's say, worse comes to worse, we are going to do the same. If we see some worries and we have good opportunities, of course, we are going to increase them. But I think it's premature today, the way the world is going, it's premature today to talk about 2024 now. Yes, on the new buildings, sorry. Now, yes, there are a few new buildings which have been over, but I mean, it's minimum, it's marginal, the thing is not going to change.

Yeah, on the orders, Daniele, I mean, if you look at the segments we operate in, we did provide an update here, so it's still very much under control. And we would like to highlight two things in that respect. One is that the issue is... The delta between the order book and the fleet, which has more than 20 years, despite these orders that you are referring to in the segments we operate in, increased. So it was of 3.7% at the end of 2022, and it moved to 4.1%. Therefore, the pool of demolition candidates increased. increased faster than the order book, despite the small increase in the order book. So there were overall 28 vessels ordered in MR and LR1 segments as of the end of March. So it's... Definitely not a very high number. If you analyze that, then, of course, if you continue ordering at these rates, then that can be more concerning. But, yeah, the outlook as it stands is still very positive in this respect. There were more orders, however, placed for LR2s. So if we were to include LR2s here in the picture, it wouldn't look as good as it looks by excluding them. Now, LR2s, however, they also compete with the Aframaxes. And so they do move quite a lot from the dirty to the clean trades. And the order book for the Afra Max is much more limited than the order book for the LR2s. And in general, for all the crude tankers, the order book is minimal. And currently, for ones much lower than for the product tankers, we are talking 3%, around 3%. So we are not too concerned about these orders for the LR2s. The Aframax sector is the one which has been benefiting most from the current environment on a relative basis. And so that is probably why this has given some ship owners to focus their orders on the LR2 sector.

Okay. Thank you. Very clear. Thank you.

There are no more questions registered this time. I'll turn the call back to you for any closing remarks.

At this point, I just thank you all for being with us and if there are no any more questions, thank you very much and We will meet again at our next school. Thank you. Thank you.

Ladies and gentlemen, thank you for joining the conference. It's now over. You may disconnect your devices. Thank you.