d'Amico International Shipping S.A.

Good afternoon. This is the conference operator. Welcome and thank you for joining the D'Amico International Shipping third quarter and nine-month 2025 results web call. All participants are on listen-only mode, and after the presentation, there will be a Q&A session. At this time, I would like to turn the conference over to Federico Rosen, CFO. Please go ahead, sir.

Good afternoon, everybody, and welcome to the Miko International Shipping Q3 earnings presentation. So moving straight on. To present issues? Okay. Skipping the executive summary as usual and moving straight to page 7, the snapshot of our fleet. As at the end of September, we had 31 ships, 31 product anchors, of which six LR1s, entirely owned, all owned, after we exercised purchase option on the channel to Houston, which was previously in bare boat chartered in. for 25.6 million at the very end of September. We had 19 MRs, which 17 owned, and two Bergo Charin, and we had six Andy vessels. Still a very young fleet relative to the industry average. The average age of DIS fleet was 9.7 years at the end of September against an industry average of slightly less than 14 years for MRs and 15.4 for LR1s. We increased the percentage of our eco-ships. which is now 87% of our fleet. This follows the sale of one of the Glenda vessels, the Glenda Melody, which was delivered to the buyers in July this year. Moving to the next slide. Bank debt situation, very straightforward. We had $19.6 million of bank loan repayment on schedule and bank loan repayment in the first nine months of the year. We had $5 million of repayment on one of the vessels that we sold. We expect to have $6.2 million of schedule of repayments in Q4 this year. And going to 26 and 27, we're expecting to have slightly less than $25 million of the scheduled repayments, with a minimum level of debt coming to maturity in 26 for only $3.2 million. and a bit of a higher amount of $64.8 million coming to maturity in 2027. At the same time, as you know, we are expecting the delivery of our four new buildings that are one since the second half of 2027, and we're expecting to finance the ships with a 50% leverage right now, which equates to a bit more than $111 million. Pretty impressive, I would say. The graph on the right that we always show, this goes back really to the significant, the leveraging plan that we have been implementing in the last years. Our daily bank loan repayment was $6,147 a day in 2019, and it dropped to $2,426 that we're expecting for 2026. with a total repayment, as I said before, of slightly less than $25 million per year. Moving to the next slide, a bit of a rough outlook on the Q4. Q4 looks really good so far. We have already fixed 54% of our days with time-shutter contracts, time-shutter out contracts, at slightly less than $23,500 a day. we've already fixed 23% of our days at $28,262 on the spot market. So that means that for Q4, we've already fixed 77% of our days at $24,930. So it looks like another very profitable quarter for us. Looking on the right, as always, we show a bit of sensitivity. So, should we make 18,000, which seems pretty unlikely on the three days that we have for Q4, so the days that are unfixed right now, that are total blend at DBTC, so spot plus DC. would be of $23,355. Should we make $21,000 a day, our blended daily TCE would rise to $24,000 a day. Should we make $24,000 a day from these unfixed days, our blended daily TCE would be of $24,719 a day. Moving to the next one. Estimated fleet evolution. We're expecting to have 30 ships. As you know, we agreed to a sale of two vessels, two of all the ships of our fleet at the end of Q2 this year. One ship, as I just mentioned before, was already delivered to the buyers in July. The other one is going to be delivered to the buyers by June. the 20th of December this year. So after that, we will have a fleet of 30 ships at the end of this year, mainly owned, 28 ships owned, and two, which are the high-fidelity, and I discovered two MRs still variable-charted in. Moving to the graph on the right at the top. Sorry, Carlos, if you go one back up. Potential upside to earnings, we still have a sensitivity for every $1,000 on the spot market of $6,000 a day for the remainder of this year. We have a sensitivity of $7.2 million for 26. For every $1,000 a day, we make more or less on the spot market. And the sensitivity is much bigger for 2027. It's of $10 million right now. And at the bottom of the page, you also see, as always, what our net result would be for 25, 26, and 27. Should we break even in the days that are not fixed right now? So should we break even for the days, for the three days, we would make a profit of $21.9 million this year, $26 million in 2026, and a 4.6 for 2027. And on the right, you can also see the sensitivity relative to the spot market. So if we make $80,000 a day on our three days, on the spot market for 2025 for the remainder of 2025 then our uh net result would be of 83.8 million dollars uh should we make it 21 000 a day our net result would be of 85.6 million dollars we make 24 000 a day our total net result for this for the year would be of 87.5 million dollars and looking at next year Again, should we make $18,000 on the spot on the three days, our net result would be of 47.7. Should we make $21,000 a day, we would make a net result of $69.4 million. Should we make $24,000 a day on the three days, our net result would rise to $91 million. So strong upside to earnings. Going to the next page on the cost side. We had a daily OPEX of $8,148 in the first nine months of 2025. We still have some inflationary pressure that we've been talking about in the last quarters, also in Q3, also in the first nine months of the year. However, the trend is staining a little bit. The overall daily figure is not significantly higher than yesterday. the same period of last year and it's really related as we mentioned previously to higher crew cost to higher insurance costs which is also the reflection historically of higher vessel values and also to some inflationary pressure that we also had on some technical expenses on the gna side We had $19.2 million of total GNAs, and here the variance relative to the previous years, as we mentioned in the past, is really related to the variable component of personal costs, which is really correlated to the very good years that we've been having recently. Moving to the next page. Very strong financial position, as you can see. We had a net financial position at the end of September 2025 of $82.4 million, or $80 million if you exclude a small residual effect related to the IFRS 16, gross debt of $231.1 million, with cash and cash equivalent of almost $149 million at the end of the period. So if you compare a net financial position to the fleet market value of our fleet, which at the end of the quarter was assessed in $1,085,000,000, our financial leverage, so calculated as the ratio between the net financial position and the fleet market value, was of only 7.4%. And just to remind everyone that this figure, this ratio was 72.9% at the end of fiscal year 2018. And this goes back to this very significant leveraging plan that we've been implementing. Going to the next page. On the income statement side, strong quarter. We made $24.3 million of net profit in the third quarter of the year, which is 24% better than in Q2. Looking at the first nine months of the year, we made a profit of $62.8 million. which includes also an asset impairment of $3.8 million that is related to the two Glenda vessels that we sold. This was something booked in Q2 that I just mentioned before. Excluding some no recurring items from the first nine months of the year, our net result would rise to $67.1 million. Of course, this is significantly lower than the same period of 2024, in which we had an even better, as you know, freight market. Although, as you can see, this year is still significantly profitable. Going to the next page, key operating measures. We achieved a spot average, a daily spot average in the first nine months of the year of 23,473. We also covered, with time charter contracts, 48.4% of our days at $23,700 a day on average, which means that we reached a planned daily TCE of $23,583 in the first nine months of the year. Looking at Q3, looking at the third quarter, we had a spot average of $25,502, which is a bit more than $1,000 a day more than in Q2, than what we made in Q2, and almost $4,300 a day more than what we made in Q1. We also covered approximately 55% of our days in the quarter at an average of 23,378. And so our blended daily TCE for the third quarter of the year was at 24,335. And it is so far our best quarter this year. Next page, I'll pass it on to you, Carlos.

Good afternoon, thanks Federico. So now we look at our CAPEX commitments. Not much left in this respect for 25, only maintenance CAPEX. And then for 26 and 27, we have the remaining installments for the four other ones ordered for a total investment of $191 million, of which only 17 million next year. And most of this instead due in 27 and more specifically at the delivery of the vessels. Going on to the following slide here, these vessels, we exercise the Houston as previously mentioned by Federico. We still have the Fidelity and Discovery, which we can exercise. These are long lease contracts, which terminate only in 2032. interest rates still haven't come down to levels which would make exercising these options attractive. So for now we keep them going, but next year a window might open up depending on the path followed by interest rates for us to exercise these options. On the following slide here instead, we show the difference in the market value of the vessels, which were previously on TCN and whose options we exercise and their book value as at the end of September, we see there's still a, the Delta is still very positive at around 46 million. slightly less than the 57 million, which represented instead the difference between the market value of the vessels and the exercise price at the exercise dates. Going on to the following slide here, we show our contract coverage. And for Q4, we have a coverage of 54%. at a very profitable average rate of almost 23,500. For 26, we actually have a slightly higher rate than that, 23,700 for 32% of the available vessel days. TC rates have been gradually moving up over the last few weeks. reflecting the the strong market conditions and the strong outlook for the market for the coming years for the reasons which will we will be discussing outlining in the rest of this presentation at the bottom we show the the increasing percentage of echo vessels that we are controlling as a result of the disposal of the non-EICO vessels in our fleet and of course in the previous years also of the deliveries that we had of new EICO vessels which joined our fleet. Here we see on this page that on the left, TC rates, the blue line and spot rates with the yellow line have been moving up since April. And on the right hand side, you see also that asset values have stabilized and actually are moving also, have been moving slightly up in the last few months. And we show here that the estimated rate for a one year tc for an echo mr today is at 23 500 so very profitable rate uh and for an equinella one at 26 500. so going on to the following slide uh russian exports of refined products they held up very well after the onset of the war for some time But more recently, we are seeing a decline. This year, in particular from April this year, we have seen these exports starting to drop more decisively. And that is the result of tougher sanctions being imposed on the country. as well as the activities by the Ukrainians which have been targeting Russian oil assets infrastructure. terminals and in particular also many refineries at a certain point this year we had almost 20% of the Russian refining capacity which was offline which could not be used because of these drone attacks by the Ukrainians so as a result of these attacks also the Russian government had to take some decisions to reduce export to keep more of the product domestically. And so I think this is only the beginning. And the full effect of the latest sanctions which were announced on Lukehold and Ross left us still to be felt. And I think we're going to be starting them towards the end of November, because there's a phase in period and December. And then we're going to be starting to see a more experts of refined products from Russia, which is an important exporter of such products. So lower experts from this country is going to tighten their refined product market and has already contributed to an increase in refining margins. So as we will see later in the presentation. Here, talking about another disruption to the market, the attacks by the Houthis to vessels crossing the Bab el-Mandeb Strait, although there is a peace agreement fragile peace agreement i would say in place currently between israel and hamas vessels have not returned to crossing the strait in a normal fashion crossings are still well below where they were prior to the beginning of the conflict And as we see on the bottom left chart, the red line, which depicts the percentage of crossings through the Bab-el-Mandeb Strait. On the top right-hand chart, instead, we show the west east to west and west to east CPP ton day volumes being transported. So as a result of more volumes having to sail the longer routes through Cape of Good Hope, if volumes had not been affected as a result of this conflict and of having to sail these longer routes, we would have expected ton days to to have risen and and that authorized that that is what happened in the first nine months of 24 where we saw a big spike relative to the red line which is the average for 2023 But thereafter, we saw a decline, a quite pronounced decline in the fourth quarter of 24 and a further small decline from that level in the first nine months of 25. There was a pickup in activity over the summer, but nonetheless, the average for the period is well below 25. the average of 2023. And then there was a more pronounced decline in October. So I would argue that even a normal, if normal crossings were to resume because this peace agreement holds and then this is not likely to be negative for the market and it could potentially be also positive. The environment we had in the first nine months of 24 was exceptional. We had very, very strong refining margins and opportunities which opened up to import these products into Europe where stocks were very low. And therefore, traders could justify paying up for vessels and saving the longer route. In a more normalized market where these arbitrages are not as big, then having to sell the longer route could actually be a negative because it could really kill the trade. and force product to stay more regionally, which is what happened mostly since Q4 24. uh and here we show also the effect of cannibalization which uh we do not see in the graph in the previous slide so not only did ton days overall declined since q424 but also a larger portion of the products of these products on this in particular east-to-west route, were transported on non-coated tankers, the LCCs, but even more so on Suez Maxis. As we see here on the graph on the right-hand side, the blue bars are the sewage max volumes transported. So, and on the left-hand side, on the yellow line here, we see the percentage of volumes transported on Mkote tankers. It did spike at 12% in 2024. when the dirty markets were weak and the clean markets were doing very well and there was a big incentive for dirty vessels to clean up to transport these products, then it declined very sharply, this percentage, but then it bounced back and now it's at 7%. So we continue seeing this kind of equalization ongoing. It's more to do now with vessels performing maiden voyages. So new bills delivered that transport CTP on their maiden voyages rather than cleanups, but there's also some cleanups which have happened this year. Going forward, this cannibalization is, we believe, is going to be driven mostly by because of the acceleration in deliveries of new builds that is expected, planned, let's say, for the rest of this year and the coming two years. Here we see that the refining margins have increased quite sharply, especially here we see track margins for Rotterdam. And they have moved up quite significantly over the last few weeks, in particular for diesel and gasoline. And this spike here we see coincides with the introduction of the tougher sanctions on Russia, on Rosneft and Lukoil by OFAC. U.S. Gulf Coast refining margins also are holding up at very attractively, at attractive levels by historical standards. So this should drive refining activity, strong refining activity in the coming weeks and months in our opinion. And this year is actually very important. What we are seeing here on the slide, on the graph on the left, we see this increase in the sanctioned oil and water. This is a very pronounced increase on sanctioned oil and water, which has been ongoing, but which gave new impetus this year. and in particular also the last few months as a result of the tougher sanctions imposed on both Iran, but in particular on Russia. On the right hand side, we see the total number of vessels sanctioned, which is above 800 vessels, which on a deadweight basis represents more than 15% of the tanker fleet. So it's a huge number. And there are also other vessels which still haven't been sanctioned, which are still involved in trades, which are shady. So part of the, let's say shadow fleet. So if we include also these vessels, we are at around 20% of the tanker fleet on a dead weight time basis. So it's a very high percentage of the fleet. and that these vessels, when they are sanctioned, their productivity falls. We have seen that vessel speeds have increased for non-sanctioned vessels over the last few weeks and months, as is to be expected given the strong freight rates, especially for crewed tankers that we are seeing. But we have seen a decline in average speeds for the sanctioned vessels. And a lot of sanctioned vessels are really not able to find, let's say, a destination for the product. So now they are on a wait and see mode in some cases. and water is linked to a more efficient process to sell these vessels, but to a certain extent it could also be seen as a sort of floating storage which is happening. because this sanctioned oil is finding it hard to then find the final buyer. We do expect that eventually this sanctioned oil will be sold because these counterparties have proven very adept at circumventing sanctions. But it creates inefficiencies in the market and the product might have to sail twice. There might be an intermediate destination is sold and then it's retransported to its final destination where it is consumed so the more use of also of course middlemen to obfuscate the origin of the product and of course more ship-to-ship transfers And here we see instead the fees on both U.S., by both the U.S. and China, which were imposed and then removed. Of course, it started with the U.S. imposing fees on vessels which were built or operated in China. by Chinese companies, and these fees took effect on October 14, and just before they were supposed to take effect, China introduced similar reciprocal fees on vessels which were linked to U.S. interests. And then a few weeks later, the two countries managed to reach an agreement to postpone the implementation of these fees by one year. But nonetheless, in particular, the fees imposed on Chinese vessels is quite impactful because China is such an important country for the production of vessels today. And the threat of such fees means that companies are not as keen in ordering in China as they otherwise would be. So these fees might end up never being implemented, but there is a risk that they will be. And as they had been, as for the last, let's say, version of these fees, those imposed by the US, a large number of bigger tankers would be, built in China, would be affected. But of course, even if you are ordering a smaller tanker, you still would have concerns in doing so in China because you never know how the legislation could then be modified at a later date. Going on to the following slide, we see here the dynamics for oil demand and refining tool puts. Both are not growing at a very strong pace, but they are still expanding nonetheless. And what is quite important here is where this growth is happening, in particular for the refined volumes. And what we are seeing is that quite important closures of refineries in Europe and in the US West Coast. So we are seeing declines in refining throughputs in these refineries. which is being more than compensated by additional refining volumes coming from the Middle East, Asia, and Africa. And that I would say is very supportive for the market going forward. As we saw over the summer here on the graph on the right, there was quite a sharp increase in refined volumes. And then these decline in October, as usually happens because of refinery maintenance before winter in the northern hemisphere. And then we have this pickup in refined volumes, which usually happens in November and December, which we expect. will occur also this year as refineries increase volumes in the coming months. Oil supply growth has been very abundant this year. It was expected to be a strong year in this respect. But with most of the increase coming from non-OPEC countries, OPEC instead decided to undertake an accelerated unwinding of the cuts which had been previously implemented between April and September this year. It increased the production quotas by almost 2.5 million barrels per day with Other increases then implemented in October and then also planned for November and December this year at a lower pace since October, but nonetheless, very pronounced increase in production quotas from OPEC this year, which coupled with the non-OPEC supply, which came to market, would have created a very oversupplied market, but this didn't happen to the extent that could have been expected because China in particular stepped in to buy more products. China has been building up its oil stocks. So compensating for what otherwise would have been an oversupplied market. And going forward, it is likely that lower production from Russia and from Iran could also act as a balancing mechanism to compensate for the sharp increases expected in production also for next year. And that would be good for the market because we would have a situation where sanctioned oil is being replaced by non-sanctioned oil, which of course then would be transported on non-sanctioned vessels. So increasing the demand and the freight rates for the compliant feed. And going on to the following slide. We see here that the total oil at sea has been rising and not as much as the sanction oil at sea, but it has been rising nonetheless also. And it's now at levels which are higher than at any point in time since January 2020. and well above also the levels which were reached in April 2020 when there was this trade war between Russia and Saudi Arabia for market share where they inundated the market with oil and we had a big spike in floating storage as we see on the graph on the top. We are still seeing this spike in floating storage, but we are seeing a big increase in oil and water. So as I mentioned, some of this oil and water is potentially, let's say, a kind of floating storage, which is still not being classified as such. But a lot of it is actually just oil, which is being transported in a more inefficient way, being triangulated, more ship-to-ship transfers. vessels, sanctioned vessels slowing down. And going on to the next slide here, we see the individual components of oil demand growth. At the beginning of the year, NAFTA was expected to be an important contributor together with Jet Fuel. Jet Fuel maintained, let's say it's promises and it was the second biggest contributor but NAFTA disappointed to a large extent and that has to do with the possibly the positive are more more favorable arbitrages available for purchases of LPG which competes with NAFTA as a petrochemical feedstock However, what surprised positively, the product which surprised positively this year was diesel, for which at the beginning of the year the demand growth was not very spectacular, the anticipated demand growth, and instead it ended up not being the product which contributed more positively to demand growth this year. Here we see that despite what we were discussing on the previous slide and not very pronounced growth for NAFTA demand, Chinese imports of NAFTA have been growing quite sharply over the last few years and also this year, despite a decline over the last few months. And that has also to do with the tariffs which had been imposed by China on imports of US LPG. US is one of the biggest exporters of LPG. And given these tariffs imposed by China on this product from the US, it became more attractive for them to import NAFTA. And here we see this is quite an important slide now because as we have been mentioning now for some time, we anticipated the crude tanker markets doing well and that they were going to be providing support to the product tanker market through positive spillover effects. because of these transmission mechanisms, which there are between these two markets. And that is happening now. So this thesis is playing out in this moment. And we are seeing this very big spike in the freight rates now for the crude tankers. In particular, the LCCs are doing very well right now, trading at above $100,000 per day, but also Swiss Maxis and Afromaxis are doing very, very well. and unsurprisingly we have seen that the percentage here of lr tools which are trading clean has fallen since july 24 from 63 to 57 so there has been a steady decline in the percentage and this has happened despite the large large and increasing numbers of LR2s that have been delivered over the course of this year. So as they are delivered, they are delivered as clean vessels, but they have, a large portion of them have been moving straight into dirty trades, and that has contributed to this reduction in, as well as the cleanups of vessels which were previously trading sharp reduction in the proportion of LR2s trading clean. And this can continue. I mean, in July, 2020, this percentage was as low as 54%, but there is nothing which prevents this percentage going even lower than that in the future. And given the strong outlook for the crude markets for next year, for the reasons that we previously discussed uh i would expect this percentage to continue falling and therefore to indirectly continue tightening the the clean markets and going on to the following slide we see here that once again there are these closures of refining capacity in europe and in the us particularly in the us west coast And those in the U.S. West Coast also are quite important because of the Jones Act and the high cost of distributing product domestically in the U.S. The needs which are going to arise, import needs for the U.S. West Coast are likely to be met with imports increasing very positively to ton miles. Here we see Africa has been an important contributor in 2024. Now there is talks of Dangote, which opened the 650,000 miles refinery last year. also expanding more than doubling its production capacity in the coming years to 1.4 million barrels per day. So Africa and in particular Nigeria could become a very important exporter of refined products in the coming years according to the government plans. And on the slide here, we see that this is another very positive message that we can show here. And whilst at the end of 24, we had these two lines, the gray and the blue line on the graph on the top left, which were very close because of the sharp increase in the order book. Now they are starting to diverge again, and very few vessels ordered this year. So the order book has declined as vessels have been delivered, and now it stands at 14.4%. But in the meantime, the fleet continued aging. So we have 19.5% of DMR and LL1 fleet now, which is more than 28%. between these two lines both well for the market, for the future market, despite the acceleration in password deliveries, which is planned for 26 and 27. But these vessels will then, as they age, soon start reaching also the 25 year mark, as we see on the bottom left. And in 2028, you have 4% of the DMR and LL1 treat, which is reaching that threshold. And then that percentage in the following years increases even further. So there's ample scope for demolition starting from 2028. And that should support the market going forward. Demolitions on the bottom graph, you see that they are still at very low levels, but they have been taking up over the last few quarters. So 11 vessels demolished in Q3. So well below levels reached in 2021 and 2018. And even more so below what is anticipated from 2028. So on the top graph, we do see that there is this acceleration in deliveries from 2025. And into next year. But if we look at the, yeah, here we see only 37 vessels for this year. So very low number if you analyze this. This is in the first nine months. So very low relative to historical standards. And so despite this acceleration in deliveries, the fleet growth across all tankers for next year is of around 3%. And given what we discussed with the increasing vessels being sanctioned, the decrease in productivity of the sanctioned vessels, the aging of vessels, we expect the market to be able to absorb this fleet growth quite well. and for us to continue benefiting from strong markets also next year. It also should be pointed out that the fleet growth, if we look at the fleet growth in the sub 20 feet next year across all tankers, it's less than 1%. So I think that's also an important indicator because vessels as they cross the 20 year mark, whether they are sanctioned or not, they do start trading in more marginal trades. And so the market for sub-20 vessels is still expected to be very tight also next year. And then finally here we show our NAV discount, which is still very significant, although it has fallen a bit over the last few months. The share price has traded up slightly since then, but we are still trading at a big distance to NAB. Here are the CapEx commitments. I think we already covered this on the previous slide, the use of funds. And, yeah, just quickly to mention, we didn't talk about the dividends. The board approved an entering dividend of a gross amount of $15.9 million. And so we don't, as previously discussed in other occasions, we don't have a dividend policy, but what we can guide today, the market, we can provide some guidance in this respect to the market today in relation to the dividends to be paid out of the 2025 results. The expectation is that the board is going to be approving for next year an additional final dividend, which would then imply a payout ratio, including the share buybacks, where we haven't been very active this year, of 40%. So the same payout ratio that we had out of the 2024 results. And so this dividend which was approved by the board today is an advance on what we expect them to be the decision in relation to the dividend that will be approved next year. and finally we have to continue working to to make our feet as efficient as possible through energy savings devices and operational measures but i think that these are the most important slides that we wanted to cover so i pass it over to the q a thank you thank you this is the 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 your screen. When announced, please click continue on the pop-up window. If you are connected in audio only, please press star and 1 on your telephone. The first question is from Gianmarco Gadini of Kepler-Chevreux. Please go ahead.

Hi, everyone. Thank you for taking my question. Just a quick one on the fixing of the spot rates on Q4. We see that they were pretty strong at $28,000 per day, and I was wondering whether this is due to specific events, specific routes, or is something that we can also expect going forward? Thanks.

yeah thank you marco thanks for the question uh no i i believe it reflects i mean i think you know we don't have such a big fleet today on the spot market so we are slightly more than 50 covered through period contracts down. So of course this creates a bit more variability in the spot results and our results can differ slightly more from the market averages because of that. But so we were, let's say, I think we employed our vessels quite well over the last few months. So we managed to catch some good spikes in the market. But we have experienced quite strong markets, so this result is the reflection of a strong market. Typically, usually in October, we actually have a quite pronounced correction in the market because of the maintenance activity that we referred to before. And we saw the graphs from the EIA with refined volumes dropping quite sharply in October. But despite that, markets held up at very good levels, especially in the U.S. Gulf. I think they were very dead. We had a number of spikes in the market, a lot of volatility, but a number of spikes. And also East of Suez markets held up quite well. So that is why we have these good results in the days fixed so far in Q4. The markets at this very moment are slightly weaker than that, than these averages that we managed to achieve so far in Q4. But I personally expect that the market will then bounce back in the second half of November and in December, and we're going to have a very strong end to the year. And I'm not the only person expecting that. If you look at the paper markets also, the levels are very strong for the last two months of this year. So there is this expectation that we will end the year on a high note because of the very strong, the very high volumes of oil and water, the high refining margins. that there are right now. So as these refineries come out of maintenance season in the coming weeks, they're going to be pumping more oil into the market, more refined products. Now we have a lot of crude oil at sea, but very soon we're going to have also a lot of refined product at sea.

Thanks.

The next question is from Massimo Bonisoli of Equita. Please go ahead.

Hello Carlos and Federico. Thank you for the presentation. I have two questions. One regarding the recent build-up in floating inventories. Could this dynamic accelerate into 2026 if the Brent forward curve moves further into contango? How much demand would create for clean tankers in your opinion? And the second, say on the TC rates, how would you describe the current condition in the time-chartered market?

still showing reluctance to commit to medium-term contracts or are you seeing sign of increased appetite to lock in rates thank you yeah uh massimo thanks uh good questions uh on the floating storage let's go back to the slides here which maybe helps us But this is the central oil and water, right, where we see this very big pronounced increase here. So of around over the last few months, 100 million barrels per day, 100 million barrels, sorry. And that is a main factor which has driven the increase in the total oil at sea, which we see here in this graph. It seems less pronounced, but still it is at very high levels here. What seems not to still have risen very much is the floating storage. So this is oil at sea on vessels which are moving. So they are not being classified as floating storage. But part of this could end up becoming floating storage in our opinion. but a large portion will then be discharged eventually uh at shore it will take longer than usual because of the sanctions because of this need of triangulations uh so to create a more inefficient market so unless the the oil price curve goes really into contango We are not going to be seeing the onshore storage filling up to the levels, which would then encourage also the floating storage. We are not there yet, but it could happen. Of course, if that were to happen too, then that would be an even bigger contributor to a very strong market, right? So it would really fire the market up. And some analysts believe that could happen. And they think that if that were to happen, you could see the LCCs reaching $200,000 per day. So it's not inconceivable. We saw the LCCs a few weeks ago. They were at $120,000 per day. So it could happen and it would drive up all the markets, right? Not only the LCCs for the reasons we mentioned because of these transmission mechanisms, which there are between these different segments of crude and product tankers. And whether it will happen or not will also depend on how efficient or effective Russia is in continuing to finding workarounds to continue exporting its oil, right? And then how the OPEC reacts to that. So what is the reaction function of OPEC? If these sanctions do slow down reduce Russian exports. That could act as a rebalancing mechanism for the market and coupled also with tougher sanctions on Iran could mean the market is not as oversupplied as feared, in particular if the Chinese continue building stocks. And in that case, we wouldn't be seeing a market going into contango, the forward curve going into contango. If instead the market is flooded with oil, because we have not, Russia continues exporting at the same levels as it was previously, and we have this anticipated growth in OPEC and OPEC oil supply, the OPEC supply growth now apparently is going to slow down, because they're going to, after this increase in December, few months, but there's still a lot of non-object growth planned for 26 and apparently much more than the demand growth. So that in itself could create a very oversupplied market and a fourth curve that goes into contango. if it's not compensated by lower production from Russia and Iran. And in that case, we could see onshore storage filling up and then floating storage happening. That would not be positive for the market longer term, because eventually those stocks would have to be digested, but it would create a very strong boost to the market short term. So, but yeah, so we don't know how this is going to play out, but there is this possibility. With respect to TC rates, we are seeing more interest today for TC, a lot more interest actually. We have had a lot of counterparties knocking at our doors to take vessels on TC. Also more interest for longer term deals, which is also a positive sign. And so we will, you know, take advantage of that to gradually increase our contract coverage, which is already now at a higher rate than, you know, we are already now at 32% contract coverage for next year. But I wouldn't be surprised if that rises more before the end of the year. So yeah.

Very clear. Thank you. Thank you, Carlos.

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Great. So if we don't have any more questions, thank you everyone for participating in today's call. And I look forward to seeing you again next year when we announce and present our full year results. And yeah, thanks a lot and see you soon then. Thank you. Goodbye.

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