Good morning, and welcome to the presentation of the Third Quarter Results for which we are streaming live here from our office in Bergen. My name is Christian Mark. I'm the CEO of Odfjellesi, and I'm joined today by the CFO of Odfjellesi, Terje Euversen. Thank you all for taking the time to listen to our quarterly presentation today. We will go through the presentation.
And then during the presentation, you should be able to post questions online. There should be a link to that on the top right hand corner of your screen. And then after the presentation, Thierry and I, we are happy to answer any questions that you may have. The agenda for today is I will take you through the highlights of the quarter. Then Terje will, as usual, come on and take you through the financials.
Then I will come back and give you an update on operational matters and finally talk about prospects and the market updates. And as I said, we will take a Q and A session towards the end of the presentation. The highlight of the third quarter is it was another quarter with positive results for Otjolesi despite a seasonally lower market and despite the fact that we had a high number of dry dockings, so our ship days were a little bit lower. And an unclear market environment, I think anyone who listen will agree to the fact that it's hard to predict at the moment. But it was another quarter of profit.
The EBITDA came in at $72,000,000 which is $10,000,000 below last quarter. And the $10,000,000 drop came from the EBITDA from tankers that came in at $64,000,000 which was down from 74,000,000 the previous quarter. Terminals were stable with $8,000,000 of EBITDA. And the net results came out at $4,000,000 compared to a positive $31,000,000 in the last quarter. But if you adjust both of those numbers for nonrecurring items, then the result in the third quarter was $5,000,000 profit compared to an adjusted profit for the last quarter of $17,000,000 So we are down 12 quarter million on
quarter.
Our COA rates continue to go up. They were up 4.5% in the third quarter. Third quarter is not a busy month for us in terms of contract renewals, but fourth quarter is. So we are right in the middle of the contract renegotiation season right now and it's comforting to see that the market accepts that there's an ongoing trend in our markets. In terms of COA coverage, you might remember from the last quarter, it was unusually low with 35%.
That came the third quarter, came back up to 50% and we see that stabilize around that mark. Also, we're heading into the fourth quarter, which is also where we would like it to be. But I'll speak later on in the operational update about the COA coverage. We also this quarter announcing new and ambitious targets ESG targets in Odfjellesi. We are announcing that we target to reduce our carbon intensity by 50% by 2030 and also that we will have a climate neutral fleet by 02/1950.
Both of those targets go beyond the targets set by IMO and we have a slide later on in the deck that will speak about that. In terms of subsequent events, we are also announcing that we have established a new pool for IMO two coated tonnage, IMO two chemical tankers, initially adding six ships to that pool. But we are actually working on expanding that pool and we hope that we can soon announce a further expansion. So this is a new, let's say, focus area for us and we hope to establish a strong presence in the commodity chemical market. So third quarter was another quarter of profit despite the seasonal impact and the high number of newbuildings.
We are satisfied with our ability to continue to report profits despite the uncertain environment. And we are happy with the new pools, which will give us more, let's say, market presence in the commodity chemical tanker markets. We expect the fourth quarter to be in line with the third quarter. And we do, of course, there are some uncertainty about the near term because of the COVID and what will happen there. But in general, we feel that there's a strong fundamentals in the chemical tanker markets.
And I'll speak about that also during the market update. At this point, I will hand it over to Terje to take you through the financials.
Thank you, Christian, and good morning to all of you. As Christian said, will take you through the financials in the third quarter. I will start with the revenue or the P and L for the chemical tanker business area this quarter. And as you can see, we saw gross revenue that declined slightly compared to the second quarter. We ended at $229,700,000 compared to 234,600,000.0 in the second quarter.
Looking at voyage expenses, that increased slightly, main reason being that we saw some higher pulp and canal costs this quarter compared to second quarter. But that is what we should consider as seasonal variations and not a longer long trend as we can see it today. After pool exploration, we then ended at the net time charter earnings at 128 compared to 137.2 in the second quarter. The main reason that the declines was that we saw that the time charter the spot market declined somewhat, especially when we consider that in the second quarter, we had a very strong spot market and we also had lower contract nominations that led us to being able to tap into a very strong spot market in second quarter, while we saw more normal activity in the spot market and also we saw increased contract nominations in the third quarter. Operating expenses increased slightly to $42,000,000 compared to 40,400,000.0 in the second quarter, main reason being delivery of new vessels.
But we also saw increase in crew costs related to changing of crews and travel expenses related to that. And we may continue to expect that going forward because we still have challenges to have this crew replaced and people coming back and forth to the vessels. G and A, quite stable compared to the second quarter. Then we ended the EBITDA up at 63.6% compared to 73.9% in the second quarter. After April's declaration, we then have an operating result of $25,000,000 compared to $37,100,000 Under financial expenses, we had some positive mark to market in the second quarter that has turned into a more negative territory in the third quarter.
So we had negative 0% in the third quarter related to other financial items. After taxes, we are then left with a net result of 2.6% compared to 19.3% in the second quarter. Looking at the terminals, we saw a small increase in gross revenue, mainly due to increasing activity following the shutdown in the second quarter. Stable operating expenses and G and A led to an EBITDA improvement to $77,800,000 compared to 7,600,000.0 in the second quarter. After capital gains and depreciation, we are now left with $2,200,000 in operating results compared to 12,500,000.0 in the second quarter.
But then we should remember that in the second quarter, we had a capital gain related to sale of one of the terminals in China of 10,300,000.0 So the operating result in second quarter is a bit inflated by that capital gain, of course. After that financials and also after taxes, we are left with a result of 1,550,000.00 compared to $11,600,000 again inflated in the second quarter due to the capital gain. If we kind of exclude depreciation of surplus values in the third quarter of US1.7 million dollars we are left with a net result for our terminal business at US3.2 million dollars Looking at the total, we have an of $71,700,000 compared to US81.9 net result of operating result of 27,100,000.0 And after taxes and finance, are left with a net result of 3,900,000.0 compared to $30.9 in the second quarter. If we deduct non recurring items, being the net financial items and the capital gain in the second quarter, we then have a normalized net result of US5 million dollars this quarter compared to US17 million dollars in the second quarter. Continuing with the balance sheet, we saw a small increase in book values of ships and newbuilding contracts due to delivery of the fifth newbuilding from Middong in the third quarter.
We see that investments and associates and joint venture is US174 million dollars The main part is Orchid Terminals, of course, with US164 million dollars which also includes cash in the joint ventures of US47 million dollars our share. The remainder of that investment associated with Geometr is down our investments in Woodford Gas. Equity increased to US560 million dollars that is equity percentage of around 30% when excluding debt related to right of use of assets. Looking at the cash flow, going a bit more into the details there. We saw that operating activities delivered a slightly decrease in the cash flow to 30,100,000.0 compared to 54,100,000.0 in the second quarter.
Main reason, of course, is that we have a lower result, but also we saw that the working capital increased by around US10 million dollars this quarter, which then led to a slightly decrease in the cash flow from operating activities. Investment activities, we had a 50 new billing delivered from Midong, as mentioned. We also had order CapEx this quarter of US7 million dollars adding to US48.2 dollars Looking at the financing parts, we had a quite busy quarter also this quarter when it comes to financing and refinancing. New interest paying debt with US127.9 million includes also a new billing delivered from Hidong, but also refinancing of several loans in the quarter. That is also affected in a payment of interest bearing debt being US101.7 million dollars this quarter.
That also includes repayment of financing for some of the vessels with around US32 million dollars which was refinanced after the end of this quarter and other US23 million dollars in cash after that refinancing was finalized in the fourth quarter. We repaid US50 million dollars on our revolving credit facility. And then we ended with a net cash flow for the period of US55.9 million negative compared to US27.3 million positive in the second quarter. That leads to a cash end of quarter of 92.4%. But in addition, we, of course, have undrawn facilities on the operated Volvo facility.
Adding that, we are around USD 138,000,000 in available cash end of third quarter. Looking at the cash flow to equity, we had a strong cash flow to equity in the second quarter of US17 million dollars That turned slightly negative this quarter with US12 million dollars Of course, changes also reflected that we have a lower results, but also the working capital increasing with US10 million dollars is partly explained why we ended in a negative net cash flow to equity in the third quarter. Bunker expenses continue to be one of our main cost proponents. We saw a slightly decrease in the cost bunker expenses also this quarter. We also see that the bunker adjustment clauses are actually working, and we are hedging 50% also going forward through the contracts and contracts of curtailments and the bunker adjustment clauses.
In addition, we also secured some additional hedging through derivatives where we have secured 25% of the uncovered bunker exposure for next year at levels that are above or at least slightly below what the current prices are indicating. We also saw that the average flats increased slightly this quarter, both in Rotterdam and Singapore, but we also see that going forward. And we have seen so far that both low sulfur fuel oil and marine gas oil actually priced lower than we saw heavy fuel oil was priced before IMO twenty twenty came into effect. Cash flow and breakeven continues to be high on our agenda. Last quarter, we had a positive kind of difference between time charter earnings and cash flow.
This quarter, that was slightly negative. We saw that the time charter earnings came down and at around $20,620 per day, while the cash breakeven was around $500 above that level this quarter. Going forward, we expect that the cash breakeven for 2021 would be very much in the same areas for the day, around $21,400 per day. But our long term target is still to reach a level of $18,000 to $19,500 per day to ensure that we can generate positive cash flow throughout the cycles. We think based on the earnings we are seeing today and based on the market we see today that we should be able to reach this goal in 2022.
But of course, that is market dependent and also dependent on how we are kind of succeeding optimizing our debt portfolio and ensure that also amortization much the economic life of our assets also going forward. Debt development, we have the bond maturing in January year. Besides with that, we don't have any actually, maturities coming up before in the second quarter twenty twenty two. We still have an ambition to refinance the bond maturing in January year, but that will be market dependent. We will only do that if we consider that right in the market that we get the price that we would like to see for that financing.
We have taken care of kind of take off financing already, so we don't need to refinance it before maturity, but we will continue to follow the market and consider when that should be done, or that will be done before or after repaying that maturity in January. Gross debt, this is a kind of illustration how that can develop going forward. It will increase slightly towards the end of this year because of the last new billing being delivered from Middong. But going forward, based on the repayment profile and amortization profiles that they have in the existing loans, we will slowly then decline gross debt for the company. And we will then in the end based on this be in the range of $750,000,000 to 900,000,000 US dollar, which is all long term aim for the debt portfolio group.
Timing, of course, is dependent on the market development and that we are able to repay according to the existing schedules. Further on the left side, this is an illustration how it may look like based on if you analyze the kind of the results this year, year to date, if you analyze that for the next few years based on what we have to that debt today, repayment profiles and also the cash, we will then kind of decrease the net interest rate debt over EBITDA from today's level at around 4.2 to be in the range of 2.4 to 2.9 in 2023. And we think that is really good achievement if we are able to do that. And of course, based on kind of the market at least being at today's level that we have seen so far in 2022. Then normally, would have a slide on the CapEx, future CapEx.
I haven't included that this time because we have very limited CapEx, especially for Orvelasi going forward when we took the delivery of the last new building from Hudong in October. So we left that for the operational review for Christian to take you through both for chemical tankers and the turbos. Then I'll hand it over to Christian.
Yes. Thank you, Thierry. Operational review. First of all, I want to speak a little bit about our operational platform because our activities, they may seem unaffected by the ongoing pandemic, but I can guarantee you that it has not felt normal throughout 2020 with most of us working from our homes for the majority of the year and a lot of us are still doing it. So it has been done more or less by remote control.
Of course, some of us can work from the comfort of home and safety of our homes, but the crew on both the ships and the operators and the terminals cannot. So it has been a very challenging year, and it has been a test of the Odfjell platform. But what is it that we mean when we talk about our platform? Well, first and foremost, we have a global platform. This means that we are close to our customers.
We are close to the terminals. We are close to the ports where the ships are often docking. It also means that when problems do occur, then we have people on the ground who can help solve those problems. So having a global platform is an absolutely an advantage in a year like 2020. We have in house ship management.
And if there was ever a year for that to be a benefit, then this is the year. I'll talk a little bit about that in a second. We have a COA conference that gives us comfort, something to operate around. We have a visibility on where the ships are going to be and where the volumes are going to be. We have an adaptable TC fleet.
And as you know, over the last couple of quarters, we have reduced the number of TC payments and the TC fleet in general, which means we are reducing risk and we are replacing them by a lot of them replacing them by cruise ships that gives us the market presence and gives us an income stream and then some of the upside. And finally, we have the flexibility of the ships. I think the second quarter has proved that when the CPP markets are very strong that we have the ability to switch into swing into the neighboring markets where we can generate good earnings and choose not to when that's not the case. But in terms of ship management, our biggest headache is the fact that we have struggled to change crew. We have 126 people who have been on board our ships for more than ten months, and we have 31 people who have been on board for more than one year.
And just spend a moment, imagine that you were unable to leave your office for a year, what that would do. And obviously, people who are on board is only half the equation. There are also people sitting in their homes ready to go to work, but who cannot because of travel restrictions. So this is, I think, our number one challenge that is that we cannot move people freely around the world, get them on board for dry dockings, get them on board for inspections and so on. And we are working as hard as we can to make sure that we pick that up.
In the third quarter, we have seen an increase in number of crew changes we have done. But now with the second wave kind of being evident around the world, we are we feel that it's we're going to continue to struggle with moving crew fully around the world. But despite that, we have our best safety performance. We have not had any LCI since 08/20/1919, more than four hundred days. We are performing better than ever on our betting performance and our predictability KPIs, which means that we measure when we promise our customers we show up at the load part of the discharge port.
We have never performed better than that. So I'm very impressed and happy with the operational performance of Oshfield despite of these ongoing, let's say, challenges in the world. The next slide I want to talk about is our COA volumes. You can see in the top left hand graph, I think, hand, yes, that in the second quarter that COA coverage dropped to 35%. That was partly by design because we freed up tonnage to go into the CPP markets.
And we were partly because most of the chemical producers in the world, they were kind of stopped in their tracks in the beginning of second quarter trying to figure out what was going on with the supply chains and so on. So we had a very low number of nominations on top of that. That has now stabilized into third quarter and also into fourth quarter. So we believe that the COA covers will be stable around 50%, which is the sweet spot for us. It's high enough to give us comfort and something to operate around to give us predictability, but it's also low enough for us to have flexibility to schedule the fleet where it makes most economic sense.
In this slide, as Thier said, we took delivery of our latest newbuilding in October. And with that, we are completing the biggest fleet expansion and renewal program in the history of the company. We have taken delivery of 19 of our own ships. We have taken delivery of 13 full ships. And we have had at the same time redeliver 24 ships from the fleet.
That has happened over a two point five year period. So the number itself may not sound that much, but I can assure you that when you look at what it takes for us to really to pull that off and get the ships into the trades where they belong, it is quite a significant challenge. And it has been done very well by the team here. It also means we have one of the most modern, if not the most modern and most energy efficient fleet in the industry. And when we talk about ESG targets a little bit later, this is certainly something that's helping us to achieve the targets that we are announcing today.
If you look at the competitive landscape, it also means that we are moving ahead of the competition. It is clear that MOL and Salt Mills and Northfield are ahead of the pack. But if you look within that group with the information we have available, there might be something going on with our competitors that we are not aware of. We'd like to think that we do know, but the reality is we probably don't. But at least with the information we have available, you can see that both in terms of average age of the fleet and the size of the fleet, are moving ahead of the competition.
And I think that gives us a very strong advantage in terms of both scale and efficiency of the fleet. Quickly talking about our terminals. In general, the terminals are performing in a stable way, 8,000,000 of EBITDA this quarter. The terminals are in general full. We did see in the second quarter across the terminals that throughput in the terminals dropped a little bit, but that's picking up in the third quarter.
And we think that they're going to continue to operate in a stable way. We are also moving forward with our expansion projects, especially in The U. S. Within the terminal in Houston. We have both greenfield and brownfield land, and we are ready to expand on and we continue to make progress on those.
Speaking a little bit about CapEx and that relation, in terms of all the plants that we have now, total expansion CapEx for the terminals is $48,000,000 But the various joint ventures we have in terminals will be self funded and have capacity to shoulder that expansion. So we don't foresee any CapEx in commercial SE to achieve these expansion goals. Turning to ESG. I mentioned it a few times. Today, we are launching new and very ambitious targets.
And they both of the targets that we launched, they go further than the IMO targets on emission. We say that Odfjell will cut our greenhouse gas emission by 50% by 02/1930. That's nine years away. Ships have an economic lifetime of thirty years. So we're in a hurry.
But as I spoke about on one of the previous slides, we are well underway and we have a clear plan for how we're going to reach that target. We also have a target to we're dedicated to pursuing only zero emission vessels technology from 2030 onwards, not all our ships with the old technology, so to speak. That's a slightly more ambitious target because we don't have answers to all the questions how that's going to happen, but we do have a fairly clear picture of what it is we want to do. But this is not something that Offshore can solve alone. We need to work with engine manufacturers and shipyards and classification societies and so on.
And that also goes from point three, which is that we will have a we target to have a climate neutral fleet by 02/1950. And that's a straight target, but something that we are dedicating our best resources on in our field SE. Now point number four on this slide says that we will actively support the initiatives and work across the industry. I just mentioned that this is not something a shipping company can do alone. 80% of the investments that the world needs to make in order for the energy transition to happen is going to be a short.
So without the authorities and regulators and the energy sellers, providers like the bunker suppliers, we won't be able to solve that. And we have dedicated resources and are ready to invest in helping doing what we can to help that development. Finally, on ESG, I also want to mention that we have now a sustainability linked finance framework in place. We think there's an appetite for ESG linked bonds. We do have a bond that matures in January, as Thierry just mentioned.
We have the cash to pay that out. But we have also considered going to the market, and we should be able to do that under attractive terms. And if the attractive terms are there, the window is open, then we think there's an appetite for ESG linked bonds, and we have that framework verified by third parties. All right. That was the operational update.
If I turn to prospects and markets update, very quickly, here we are looking at the total tonne mile demand picture. The last three years, we've had a strong growth in in tonne mile. And what you see in the 2020 with the pandemic happened, that dropped quite dramatically. But it's important to note that it never contracted. We think it's a very robust demand picture.
I'll speak to that on the next slide. And we also think that we have turned the bottom in the second quarter. If you listen to what the chemical producers and our customers are saying about the world, even those who are exposed to automotive and construction, which are the two industries that have been hardest hit, it seems like things have bottomed out in the second quarter and are starting to grow again. So it's a lower demand growth than we have seen in the last couple of years, but we think that that's going to be growth throughout the coming quarters and years. The reason for that growth is that it's, I would say, structural.
If you look at what has happened for the chemical producers, feedstock prices have obviously dropped and they have dropped more in The States as well. And that means on the middle graph here, you see that the competitiveness of the long haul, let's say, based producers and especially in The U. S. And also a little bit in The Middle East is very much still in place. And that means that the Chinese, is the biggest import market, continue to replace domestic production with imports.
And that's a picture that we see continuing. Yes, at a lower pace than we had expected a year ago, but nobody saw the pandemic coming. But we also think that post pandemic and with the IMF projections for growth next year, that this will very much be the case in the coming year. So we think that's a fairly resistant we continue to think that's a fairly resistant demand story for DPC chemical tankers. The supply side, I'd say it's the strongest market strongest supply picture we have seen for, I would say, decades.
The first two bars on this graph relates to swing tonnage and floating storage in the CPP markets. Obviously, the CPP markets take off as they did in the second quarter, it means that the swing tonnage retract and a lot of the CPP tonnage gets stuck in floating storage. That is being unwinded now, and there's a little bit of reversal of the swing tonnage. So we do see some competition from that, but not to a great extent. And it's also important to remember that no matter which way you turn the supply side picture, if you look at the bottom graph, we have historically low order book, and we don't see any major risk of a big number of orders happening in the next, say, to two, maybe even three years because of the uncertainty on the future technology.
So we think that from a supply perspective, we have a very strong situation in the next coming years for chemical tankers. So the future market developments are highly dependent on the restart of the global economy. While we wait for that, it is still a very robust picture. We have not seen any contraction in demand. We didn't see a contraction in demand in 2009 during the financial crisis either.
So it's a very robust picture and the structural changes in the market are here to say. We think we have lowered our growth forecast to now 3% compounded over the next couple of years with some pluses and minuses, but still 3% growth in the tonne mile demand. And at the same time, the supply is not going to grow by more than 1% in the same period. And that is after a few years where supply have not grown as much as demand. So we think that there are strong fundamentals but a near term uncertainty because of the COVID-nineteen.
So I think that was the comments on the market development from my side. So in summary, third quarter was another quarter with positive results despite the seasonality, the many dry dockings and the uncertainty in the market. We continue to operate well and safely and more efficiently despite the challenges of COVID-nineteen and home offices and what have you. We have continued to with our consolidation efforts, have established a new IMO two coated chemical tanker pool initially with six ships. Hopefully, we can announce further expansion of that shortly.
We have ESG targets where we put our own hand on the heating plate, so to speak, and we are prepared to make sure that we take responsibility as a company, be good corporate citizens and we also take our share in moving the entire industry forward. And the outlook is that the fourth quarter will be in line with the third quarter. And then we hope that the turmoil in the markets will be sorted, and we can see the growth that IMF have been projecting for 2021. So that was the end of the presentation. I can see that we have had a number of questions posed.
So I think we will take them in good order. I don't know if your question which ones I haven't read them.
Yes. You could start with a question from Lars last time in Arctic. You mentioned that a part of the plan to reach the outland climate targets is only ordering vessels with zero emission technology from 02/1930. When do you expect to see viable zero emission technologies based on what you know today?
I think the irony well, it's very good question. I think there's a lot of question marks a lot of questions, the details about that, that's difficult to answer. But but I think the reality is that the technology actually exists. It might not have been scaled up. It might not be on on board ships.
But the if you look at the technology that the ship itself requires, I think in terms of fuel flex engines and so on, I think the technology to a large extent exists. So it becomes a question about fuel type. And as I said earlier, 80% of the investments total investments in the industry will have to be done ashore. So it very much depends on what does oil majors and other energy providers decide to do, what does the authorities allow because we may choose one fuel, whether it's ammonia or whether it's hydrogen or whatever. But if it's not available and the infrastructure is not there, then it's going to be impossible.
Personally, I think the answer would be somewhere in the, let's say, ammonia type green ammonia, more than hydrogen, whatever. But I think the the reality is we don't have a clear answer for for how it will look.
And then from Anders Karlsson in Danske Bank. On the COA front, are you entering into or winning new contracts, or are we mainly talking continuation existing contracts?
I I think both. You know, I think we have we have spent quite a lot of energy in the past two years to analyze not only the COAs themselves, but how they interact. So, you know, when you have more than 100 COAs, every time you take a COA, you also dedicate yourself to to a certain trade in a certain warp, and and then the the interlinkage between those contract is very complex. So we have found out that there are some contracts that we are simply going to leave because they create very much of an operational complexity. And there are other contracts where we are probably more aggressively pursuing them because they fit very nicely into our operations.
So we win new contracts. We lose contracts. Most of those we lose, we lose by design. And but there's also a vast number of contracts that we just, let's say, just roll over but that we renew with existing customers.
Then one question from Wendig Engebresen with Danske Bank. Congrats with another strong report. Could you elaborate on the development of a potential divestment of Tianjin as part of LGS exit from the remaining assets in China?
Yeah. Think we have said clearly that if there's if an exit opportunity will present itself, we will tag along with that. That process is ongoing. We have advisers. We have live discussions with potential buyers.
Things are, of course, slightly challenging on that front because of COVID and inability to travel and so on. So it's difficult to say anything about the time line, but I think our focus going forward is going to be on Korea, on Antwerp and on The U. S. So yes, so I personally think that that's going to happen. But the terminal continues to operate.
And if it doesn't happen tomorrow, then we are patient. But I think it's heading in that direction.
And there's another question from Lars Bastian of String in Arctic Securities. The newbuilding program is now completed. Do you have any plans for further expansions? If so, would that be mainly through ordering newbuildings, chartering in vessels or expanding pools?
Yes, that can turn into a long answer. I think standing where we are today with the fleet changes we have done and the most modern and energy efficient fleet in the world without any growth CapEx gives us great visibility on our balance sheet. And I think we are not going to jump into big CapEx expansions with newbuildings right now. But of course also in the longer term, we cannot say that we will have a climate neutral fleet by 2050 if we don't start investing in it. So there a will time, but this not for now.
I think we are very happy with the visibility we have on the balance sheet from a cash perspective as well. And so we're not going to go out and order ships right now. We do think that it might make sense to continue with the consolidation. The last, say, couple of deals we have made have been pool based, where we get a fee, we get some kind of upside in operating the ships and we can do it without losing our balance sheet. Think that's good for the customers.
It's good for it's a good way to grow. But of course, we also keep our ears to the ground in terms of interesting opportunities. But I think for now, we are happy with the situation with the visibility and I think that's going to stay that way until we hit, let's say, smoother waters.
And then another one from Vlad Vostjan in Arctic Securities. How concerning is the current weakness in CPP and crude tanker markets? Do you see that as a real threat to chemical tanker markets going into 2021?
Well, I mean, you have seen when VLCCs drop into, let's say, below $10,000 per day close to their OpEx and periods, the same for product tankers. Of course, product tankers will start to swing into our market. So it does have an effect. I don't think it's a sustainable level at the moment. We but when you see the core of what we carry, we don't compete with product tankers.
So do I see, let's say, a catastrophic impact from that? No, I don't. I see it as continued factor to with the swing tonnage, but I don't see it as a fundamental threat to the positive picture we have in chemical tankers.
Can you shed a light on impact of time charters on earnings of the LPG ships versus pool?
No. We have a confidentiality clause in that so I cannot talk about the levels. But what I can say is that the pool that the ship used to be in is, in our view, the best performing pool in that segment. And we think that the rates we are getting on the two gas ships were high enough for us to take the decision to take the ships out of the pool. But I prefer not to speak about the levels.
And then a question with regards to our fuel cell project. What costs are expected per vessel to fit fuel cells if successful?
I don't have that figure in my head. It's something we'll come back to you on. I think the investments we have had to make in the, let's say, development of the technology itself, we have done. So that will not be kind of no major CapEx in that. But there might be some costs relating to, let's say, the dry docking and the fitting and so on.
The actual number, I don't have that readily available. It's not significant amount, but we can get back to you with that figure, if you make a note of it. Yeah. You
mentioned that you have an ESG linked framework in place for bond financing. Could you elaborate on how such a bond would be priced and what factors would drive the pricing? Furthermore, what is the right price for a refinancing of the 2021 bond maturity? I think I'll let Thierry answer that question. What
they can do? We have the framework in place that could be used both for for bond financing, but, of course, it will used for for traditionally bank financing. So whether we will use it for for upcoming refinancing when that is going to take place, we haven't decided yet. But, we think that if we should do it, we should do it because there's an interest for it in the markets. And we don't expect that the price will be very much lower than we could get on a plain vanilla bond, but maybe we could attract more interest from some investors that could potentially lead to more kind of investors pushing down the price for such an issue.
That remains to be seen, but we have a framework in place. A lot of good work has been done with that framework, and we are prepared to use that if we find that attractive. When it comes to the right timing and right pricing to do a bond issue, we did a tap issue beginning of this year. That was around 500 basis points above LIBOR. That is not achievable today, we acknowledge.
Today, we are priced for maybe four or five years, above 600 basis points in margin. We think that is on high side, so we would like to see it come down somewhat. But whether 600 or five fifty is the right price, that we haven't really decided.
And then a question from Eirik Kowalsen in Pareto Securities. We understand your desire to pay down substantial amounts of debt now that the CapEx wave is completed. How do your dividends fit into this?
Of course, we have been also clear that we have a long term ambition also to provide a sustainable and kind of reliable dividend and also come up with a dividend policy in the near future. And of course, if we continue to deliver profitable results, we should also be able to then start kind of delivering dividend in a more regular basis going forward. Whether that will be on the basis of this year's results or the next year, I think that will be dependent on the market, how that develop and the actual earnings that we are generating in the markets. For the day, our main focus is to deleverage and reduce our cash breakeven. But we understand and certainly appreciating that we also have to be more firm on the dividend and dividend capacity when we are now starting to deliver profitable results.
And then a question from Paul Holderdahl in Spire1KN Markets. Could you please reflect a bit more on the near and medium term earnings outlook uncertainty regarding signs of a second wave of corona versus benefit of COA and Q4 earnings and then also supplydemand targets from your CMD?
Yes. Think the I don't remember what the supply demand targets from the CMD was in particular. I think the supply picture hasn't changed. But as I mentioned earlier in the presentation, then the demand picture has. I think the problem at the moment is not the supply demand picture.
The problem at the moment is the spot a nervous spot market because of the uncertainty in the world, the COVID-nineteen. And don't forget also that we have inefficiencies built into the way we operate. We sometimes have to delay ships or reschedule ships, deviate ships to pick up crew, take another two days here and spend that extra money. The COVID-nineteen just adds a near term uncertainty about that market. The COA market, though, continues to be up.
And I think that would not happen if the balance between supply and demand were not favorable. And you can see quarter by quarter, it goes up between 35%, and we think that that's going to be the way that it continues. So there's a strong underlying market, but the spot market continues to be a challenge. We are approaching 2021 with some optimism, I would say, careful optimism. Everything depends on how do we get out of the pandemic itself.
It depends, of course, also to a certain extent the previous question about the crude and the product tanker markets. Historically, that has drawn with it the spot market. But in the meantime, I think if we can continue to generate earnings in the level that we have done even with that challenging spot market, then we just have to weather that out. But it hasn't changed our fundamental view that we are looking we are probably at the beginning of an upturn in this market. Whether it's going to be a high cycle or medium cycle or when it's going to start, this is not the time to be very concrete about that point in time.
But in general, the picture is positive. But we are, of course, concerned about the short term.
And then a final question. Will the outcome of the U. S. Election have any impact on chemical tanker markets, you think?
I think the world would like an answer one way or the other and some stability. I think and of course, we would, as anyone, welcome that. I don't think that it will impact the picture that we have just shown, the fact that the long haul chemical producers have a structural advantage, that the number of ships being built and so on, it could it could it may impact, let's say, how quickly the economy returns, but I would doubt that it would be significant. So the short answer is I don't think that the outcome would have a direct impact on the fundamentals for our industry. There appears to be no further questions online.
All right. Then I want to thank everybody for taking your time to listen in today. I hope everybody stays safe wherever you are. And, if you do have questions that you feel are not adequately answered or you have other questions, you know where to find us, which is here or in our home offices for the moment. But, we are reachable by by, by email or phone or whatever you need us.
So, but in the meantime, stay safe, and, thank you for listen