Good day and welcome to the Stolt-Nielsen Limited first quarter 2018 results presentation and conference call. Today's conference is being recorded. At this time, I would like to turn the conference over to Mr. Niels G. Stolt-Nielsen. Please go ahead, sir.
Thank you. Good morning, good afternoon, and thank you for joining us at our first quarter 2018 result presentation here in Oslo. I will be referring to a presentation which is on our website. Again, with me today for the first time as CFO is Jens Grüner-Hegge taking over after Jan Engelhardtsen. The agenda, as always, we will go through the highlights for the first quarter, I will go through each of the businesses, followed up by Jens who will do the financials, and we will open up for question and answers at the end. Moving on to page five of the presentation.
The biggest impact on the first quarter results was the $24.9 million one-time gain we had as a result of the reduction in taxes implemented by Trump, primarily coming from the assets that we had, the deferred tax liability that we had in the United States because of our terminals in Houston and in New Orleans. Stolt Tankers reported an operating profit of $10.9 million, and that is down from $20.4 million in the fourth quarter of last year. The main impact and the main reason for that is the increased bunker price. I will go into, of course, more details under the tanker presentation. Stolthaven Terminals reported an operating profit of $25.9 million, and that is up from $5.4 million in the fourth quarter. The fourth quarter included a one-time impairment of $8.4 in the asset in New Zealand.
Also the first quarter of this year had an $8.2 million gain of some deferred tax gain that we had on lower taxes in Antwerp in our terminal. The underlying improvement in earnings in terminals are significant, and we'll show that more in details later. Stolt Tank Containers reported an operating profit of $16.2. That's down from $17 million from in the fourth quarter. That is actually quite a good result, taking into consideration that first quarter is traditionally a slow quarter for Stolt Tank Containers. Stolt Sea Farm operating profit before the fair value adjustment of inventories was $2.2, and that is up from $0.1 million in the fourth quarter. That reflects better margins, lower operating cost or production cost, and better prices. Corporate and others had a loss of $3.6 million, and that is compared a loss of $9.4 million in the prior period.
Giving us a net profit for the quarter of $38.7 million versus the $1.1 million we reported in the fourth quarter of last year. Moving down to the net profit variance analysis between the fourth quarter and first quarter. $1.1 million in the fourth quarter of last year, $9.5 million because of lower Tanker operating profit, higher Terminal profit of $20.5 million, $0.8 million lower Tank Container, slightly higher Sea Farm. You have the $24.9 million gain from the one-off, $4.7 million higher corporate and other results. That's primarily driven that we had lower A&G and better equity income from our equity investments. We had an impairment of our bitumen business in Stolt Bitumen in the last quarter, which we didn't have this quarter.
We also had a one-off gain last quarter in the fourth quarter of the U.S. retiree healthcare plan in the prior quarter of $7.2 million, which we didn't have this quarter. FX, slightly higher taxes, bringing us to $38.7 million net profit. Moving on to Stolt Tankers. Out of the $4.5 billion we have in assets, $2.5 billion is in ships. This is the challenging part. Deep sea revenue for the quarter increased 3.7%. That reflects an increase in average COA rates. The regional fleet also did better and increased by 7.4%. I remind you that the fourth quarter of 2017 was negatively impacted, the revenue was negatively impacted by 2.5% because of Hurricane Harvey. The total volume we shipped in the first quarter increased by 0.6%, driven by higher spot volumes.
The COA renewals in the quarter were on average down by 4.1%, compared to a decrease of 1.1% in the fourth quarter. The COAs that we renewed, the ones that we renewed and that we didn't lose, the average rate decrease was 4.1%, reflecting a highly competitive market in the COA segment. However, rates and terms and conditions on the COAs, 87% of the 2018 COAs have been fixed and are agreed with customers. 87% of the COAs that we will carry in 2018 have been now fixed. The COA rates were higher In first quarter versus the fourth quarter. That doesn't reflect that we had higher COA rates that we fixed, but it's because in the fourth quarter, we had Hurricane Harvey, and a lot of the COA nominations were canceled, we actually carried more spot volume.
We had a lower Now, this first quarter after Harvey, the COA nominations were more normal out of the U.S. Gulf, where we have higher COA rates. It is not really reflecting a better COA market, but the first quarter we fixed more U.S. Gulf to the Far East, more transatlantic COAs were booked and they have higher contract rates, COA rates. You can see here on the STJS or Stolt Tankers Joint Service Survey and Time Charter Index that the lowest we have since 2009 was first quarter 2012, and here it shows 0.56, and today we are at 0.57. Not really a pretty picture. If we look at page eight, this is operating profit variance between the fourth quarter and the first quarter. Higher trading, excluding bunker impact, due to Hurricane Harvey.
In other words, the COA nomination I explained caused the higher trading results of $6.4. That was offset by $8.7 million of bunker hedge variance. That is the paper hedge variance that we had. In the fourth quarter, we had a paper hedge gain, which we did not have this quarter. We have the bunker cost variance. That is because of the higher bunker cost. If you take the bunker cost, plus or minus the bunker surcharge that we get, we had a $5.6 million more or higher bunker cost in the first quarter. We had significantly lower ship management cost this quarter. Lower joint venture equity income, reflecting the same as we see in our main fleet. Higher depreciation and gain and loss on sale of assets of -$1, bringing us to $10.9.
The bunker cost net of bunker surcharge, but excluding bunker hedges, increased by $5.6, as I explained. The average price for the IFO consumed increased to $369 per ton, and that is up from $328 in the fourth quarter. The average IFO price that we purchased in the quarter was $379 compared to the $348. The COA bunker surcharge clause covers on average 61%. That is the bunker clause that we have in our COAs. Here you see the historic bunker prices versus the spot rate. I mentioned that the STJS index was 0.56 in the first quarter of 2012, and it is now 0.57 in 2018. While we were basically net break even in Stolt Tankers, in 2012 as a full year, we lost $55 million, even though the index is at the same level.
That is because, one, the regional fleets are doing better, which is not included in the STJS. Also our operating costs have gone significantly down compared to 2012. It is positive. The market is not positive, but if you compare the market conditions, we are actually doing better today relatively because of our lower operating costs. An increase in IFO fuel prices from $350-$375 result in a $7.8 million additional cost. At current IFO purchase price, about 1% of total fuel cost is recovered through surcharge clause in our contracts. If the IFO price increases to $450, this would grow to 9% recovery. I will show you here in more detail.
This is something that you can look at when you come back, this is a sensitivity of how the bunker price, you can see that the bunker price has a big impact on our results. Demand in our business is normal. The volume is healthy. Our results are heavily impacted by the bunkers. If you take that we consume around 112,000 tons per quarter. At the current first quarter price of $369, our total cost is $55.9 million. If that bunker price goes up by 5% to $387, the bunker cost, IFO and marine gas oil, will be $58.7. That is a $2.8 million increase. We expect to recover $1.5 million through our COA bunker clause, which has a net impact of $1.3 million. We also have the paper hedges, which will give us a positive gain of $2.1.
We have given you various examples, and you can look at that in your models. Moving to page 12, market development. The spot rates strengthened in late 2017, early 2018. Unfortunately, improvement was short-lived and the market has returned to earlier weaker levels. There is an intense COA competition driven by owners seeking to secure cargo in advance of the new buildings that we see are coming in in 2018 and some in 2019, but majority in 2018. We are really seeing strong competition from our main competitors on our COA renewals. That was again reflected in the 4.1% decrease in the COA renewals in the first quarter. Outlook remains stable for fundamental petrochemical shipment demands. It is a healthy demand.
Of course, there is a lot of uncertainty with the trade war that hopefully is not going to develop as a trade war, but as it stands now, we see healthy nominations. Volume wise, nothing is wrong. The MR market remains weak and continues to have a negative impact on the chemical tanker market. We see that the completion cargo, when we have finished our COA nominations, we fill it up with spot. Sometimes on the repositioning legs, that can really impact the round voyage results. You fill it up with easy chemicals, and that market is influenced by the MR market. Higher fuel prices, and excess new building supply will limit the gains in years ahead. On page 13, the VLCC and MR market and chemical market are very frequently correlated. All three segments remain in oversupply, with further new buildings on order.
You can see here we have compared the three segments and they do correlate. Growth and demand is insufficient to absorb the new building capacity that is being delivered. There is no significant recycling that we expect. Our market outlook remains that 2018 will be a challenging year. We hope to remain profitable, but it is a challenge. However, based on the new building on orders, and unless we start to see a new wave of orders, which I do not think is going to happen in the near future, we do expect that 2019 and 2020 can be good years. Page 14. Here you see the order book, and you can see that there is significant delivery in 2018, tapering off in 2019 and 2020. Moving to some better news, and that is the terminal division. It continues to grow both top line and bottom line and strengthening.
Revenue increased by $1.2 million last quarter. The global utilization has grown to 88.5%, up from 87.6%, and that is due to additional lease tanks that we did in the fourth quarter, both in Houston and in our U.K. terminal in Dagenham. The same thing for utilization in our joint venture, went to 93.4% up from 91.4% due to improvements in Ulsan in South Korea. Operating profit increase reflected the $8.2 million of additional joint venture equity income resulting from the reduction of deferred tax liability in our JV in Antwerp that we have with Oiltanking. $8.4 million expense last quarter relating to the impairment of assets in New Zealand. The underlying fundamental operating profit was up by.
$4 million.
$4 million. It's nice to see there's only blue on this slide. Page 16, $5.4 higher revenue. We didn't have the impairment this time around that we did in New Zealand in the fourth quarter. Higher equity income or the joint venture income, the deferred tax liability to the joint venture and lower operating expenses. That's going from $5.4 million to $25.9. On page 17, Stolthaven Terminals market update and key initiatives. We continue to pursue the development of long-term contracts with potential pipeline connected industrial customers. Long-term, this is primarily looking at our hubs, our big terminals, especially in Houston. We continue to focus on the ship-to-shore efficiencies. Here we are including the construction of a new ship dock in Houston, as we have announced earlier, and we expect that to be completed in the first quarter of 2019.
Aim is to reduce the ship waiting time and turnaround times, improving tons per hour while increasing terminal throughput volumes. Houston is performing well with increased operating revenue as a result of high utilization rates and utility revenues and exports are strong. Concerns about the U.S. and the China tariff dispute. I must say that the U.S. Gulf market is very strong. We're getting a lot of inquiries in Houston and in New Orleans, and that's very encouraging. Guy Bessant, the President of Stolthaven Terminals is really doing a fantastic job with the turnaround, upgrading the terminal, but not only upgrading the assets, but also reviewing our portfolio of contracts. Shedding off the low paying, low margin business that is not strategic for Stolthaven and replacing it and taking advantage of the strong market and replacing it with higher paying business.
The Singapore market remains challenging, as we know, we are seeing signs, we have won some additional contracts there, we see more and more inquiries in our Singapore terminal. The Korean market is showing stable demand with an improvement in lease capacity and increased equity income. The European market remains stable for chemicals, but weak for CPP. I'm very happy that, as you know, we are focusing on chemicals in our terminal business. The infrastructure improvement is on the way. Just to remind you, Stolt-Nielsen has invested over $1 billion in terminals since 2010, almost doubling our capacity with an increase of more than 800,000 cubic meters. The multiple infrastructure investments at our terminals, including, again, the new jetty in Houston. Action aimed at improving utilization, growing the revenue base, and enhancing overall performance.
Focusing on our EBITDA margin towards 60% and further growth of EBITDA may come from improved utilization and organic growth. I would say that, as you know, we have $2.4 billion in debt. We have reached our self-imposed debt limit. The reason that we have that debt is that we have invested in our businesses, of course, and we have grown the terminal business significantly. I believe we will see a significant growth without any further acquisitions or further tanks. We will see continued growth in the earnings coming from the terminals by improving the utilization, filling up the tanks that we built, and also improving the margins by shedding off the low-paying business and replacing it with higher-paying business because of the improved market conditions.
Again, I think that you will continue to see improved earnings coming from Stolthaven Terminals without adding any additional debt to our company. Page 19, Stolt Tank Containers continues to be a star performer, and I'm very happy to say that the market is strong. It fell, as you know, in 2015 and 2016, but it's recovered nicely in 2017 and 2018, and we are seeing no signs of slowing down. Even though the margins have come down, our utilization have come up again. When the utilization has come up to over 75%, we are now pushing up margin too. There is a lot of activity. Revenue is down in the quarter, but that's a seasonal trend, very much driven by the Chinese slowdown during the year. We continue to develop the depot network to support the businesses.
We are building a huge depot in Jubail next to Sadara, the joint venture between Saudi Aramco and Dow. We are building these depots at strategic locations so that we can turn the tanks around quickly and offer an efficient service in these key locations. Utilization, essentially unchanged and margins stable. Here, again, I think that we will continue to see improved earnings from Stolt Tank Containers going forward. Just quickly going through the operating variance for tank containers between fourth and first quarter, page 20. Operating profit of $17, lower transportation demurrage and other revenue of $4.4, lower operating expenses of $4.7, slightly higher A&G of $0.8 and others $0.3, bringing us to $16.2, very much seasonally driven. Stolt Tankers market update and key initiatives on page 21.
Strong demand in most regions, focus on increased both utilization and terms per tank, reduction operating expenses, and we continue to focus on developing our systems and our platform, which I think is the key competitive advantage Stolt Tank Containers has. Two depots under construction in Saudi Arabia and the U.A.E., aimed at improving turnaround times. We continue to grow the fleet. Historically, we run both the fleet and the shipments of around 5%, and there's no reason why we're not going to continue to do that going forward. Fish, very quickly. You will see improved margins. The turbot prices are up, the sole prices are up. I think we will continue here also to see improvement both from the turbot business and the sole business as the sole volume increases. Moving to page 23. I'm not going to go through it.
$4.9 million in operating profit in the fourth quarter and $5.5 million in the first quarter. We have not reduced our prices after the Christmas and New Year sale, and we have been able to keep the prices up during what is normally a slow season, and we are actually now in the process of increasing it again. Looks promising. That completes my part of the presentation. I'll give it to you, Jens, for your first time. Good luck.
Thank you. Well, thank you for that. Good afternoon, and good morning to those in the United States. Not going to see any big changes here, but I'll provide as normal further comments to the financial results as they were released today for the first quarter, and also give some further guidance on the P&L items for the next quarter. Before proceeding, I would like to remind you that we have today filed with the Oslo Stock Exchange our interim financials. That, together with the earnings release and this presentation has all been posted on our website. Moving to the next slide. Operating profit before one-offs for the first quarter of 2018 was $46.7 million. That's pretty consistent with the $47 million that we had in the prior quarter.
In the fourth quarter, the negative impact on tankers from Hurricane Harvey was about $7 million, offset by the bunker hedge gain of $8.4 million. Whereas in the first quarter this year, the higher bunker prices had a negative impact, as Niels mentioned, of about over $6 million after surcharges. Now before one-time adjustments, terminals had an improved performance of $4 million in operating profit, and corporate and other had reduced A&G and improved results on equity investments. Now if you look at the major one-offs, as we had quite a few last quarter, this quarter we are showing one, and that is the gain at our joint venture terminal, Oiltanking Stolthaven Antwerp, Belgium, where we had a one-off gain of $8.2 million related to the reduction in the Belgian corporate tax rate that went from 35% down to 25%.
If we look including all these one-offs, the operating profit increased by $16.6 million compared to the prior quarter. Net interest expense was consistent with the prior quarter. The tax, as Niels mentioned, included effect of the U.S. income tax change in the corporate income tax rate from 35% to 21%, which became effective January 1st this year. The FX loss that you see there was a result of the weakening dollar compared to the prior quarter. Net-net, we then came in at a net profit of $38.7 million for the quarter. Moving to the next slide. Our focus continues to be on reducing debt where and when we can and on maintaining a strong liquidity position. During the quarter, the debt increased by $50 million to $2.50 billion, as we drew down on a credit line to pay for some of the capital expenditures.
I'll come back to the capital expenditures a bit later to show you how we're actually going to reduce those. Equity was also up by $83.8 million, up to $1.56 billion. This was in addition to the net income for the quarter. This is also due to increasing foreign currency and hedging reserves in our other comprehensive income. This was driven by the weaker dollar. Debt to tangible net worth ratio stayed steady at 1.55 to 1 compared to 1.51. Sorry, same as the fourth quarter. If you look at the net debt to tangible net worth, that was marginally down at 1.5 compared to 1.51. The EBITDA to interest expense ratio for the quarter, that was at 3.49, and that was an improvement from the prior quarter. At quarter end, the availability under our revolving credit line was $395 million.
We did pay down a bond subsequent to the quarter end, hence why we have such a significant availability. In addition to that, we had $70 million in cash, and we had $65 million in uncommitted credit lines, so for a total liquidity position of more than half a billion dollars. Average interest rate for the quarter was at 4.92%. This is slightly above the fourth quarter, and that's because in the first quarter we had the full impact of the bond we issued in September last year, the fixed rate $175 million U.S. dollar bond. We expect that the interest expense for the coming quarter will be just marginally down, but around $34 million. Moving over to the cash flow. Cash flow from operations was positive $57 million. It was down from $62 million the prior quarter.
This was primarily due to lower working capital than in the prior quarter as trade receivables hedged up. Most of that $23 million in working capital is an increase in accounts receivable. CapEx for the fourth quarter included work on terminal projects, including the Houston jetty, Stolt Tank Containers depot expansions, and dry docking of ships. Debt issuance primarily reflects the $45 million drawdown on the share pledge facility that we have and $9 million on the revolver to fund capital expenditures. Cash balance at the end of the quarter was, as mentioned, $70 million, slightly up from $58 million. Our focus does remain on reducing debt and carefully reviewing our capital expenditures and reducing our operating expense.
Looking at the EBITDA, I just want to remind you that the SNL EBITDA figure that we are showing here excludes any impact of the Stolt Sea Farm IFRS fair value adjustments to their inventory. It also excludes gain or loss on sale of assets and any other non-cash one-time events. Tankers EBITDA decreased mainly due to more challenging market conditions driven by the higher bunker price. Terminals increased due to improved EBITDA at Houston and some of our joint venture terminals. I should highlight here that that increase excludes the gain that we took at our Antwerp terminal, $8.2 million. This is excluding those $8.2 million. STC's EBITDA decreased slightly, consistent with a seasonally weak first quarter, but is well above what we had at the first quarter last year.
As a consequence, Stolt-Nielsen's EBITDA for the quarter decreased to $109 million from $111 million, driven mostly by the tankers reduction. Going over to Administrative and General expenses on the next slide. For the quarter, this was up at $57 million, up from $52.3 million in the prior quarter. This is consistent with the guidance that we gave of $57 million. But keep in mind that the prior quarter had a gain of $3.9 million that related to the change in the U.S. retiree healthcare insurance plan. So that pulled down the prior quarter's A&G. Increases in the first quarter was also due to the higher profit sharing and long-term incentive plan accrual and normal annual salary increases that kick in the first quarter. Our guidance for the next quarter is essentially unchanged from this quarter.
Moving over to the next slide, depreciation and amortization for the first quarter was $67.2 million. This compared with $68.6 million in the fourth quarter and our guidance of $69 million. The reduction in STC was due to an adjustment in the fourth quarter of the useful lives of a group of containers, as well as making a correction to depreciation of some leased tank containers. That increased the depreciation in the fourth quarter for STC by $1.6 million. A subsequent consequence of that is that subsequent quarters will have lower depreciation. Hence the drop that you see there for STC. The guidance for the next quarter is $69.2 million. I'll not go in on the impairment, but just show that as a reminder to you all. Moving on to the next. Share of profit of JVs and tax.
Share profits in our joint ventures was $14.3 million as compared to $4.6, that is predominantly driven by the significant one-off at our Oiltanking joint venture in Antwerp. Tankers saw a slight decrease, that was in line with the overall tanker results. In addition to the improvements in Antwerp for terminals, we also saw improvements at our joint venture in Ulsan, South Korea, which produced improved results following the capacity expansion there. Our guidance for the next quarter is $5.7 million, pretty much removing the $8.2 million gain in Antwerp. The reduction in the tax charge comes mainly from the reduction in the net deferred tax liability, as we talked about earlier. This followed the U.S. government's decision to lower the corporate tax rate from 35% down to 21%, effective January 1st. It had a positive impact of $24.9 million in our first quarter 2018 results.
Capital expenditures. They were $37 million in the first quarter. This included tanker dry dockings, terminal expansions, including improvements and jetty expansions at Houston and our Newcastle, Australia terminal, expansions at our Santos, Brazil terminal, and further deposits on our gas new buildings. As you can see, the capital expenditures are going down substantially going forward. Now that we have really completed our new building program, we have a total of $435 million remaining through 2022 as it stands today. Tankers CapEx going forward includes about $45 million, that's for ballast water treatment systems. For terminals, we have a further $24 million for the Houston jetty and other $27 million for further improvements at the Houston terminal. $12 million for the expansion in Brazil at Santos, the bulk remaining is for maintenance CapEx.
At Stolt Sea Farm, we have new farms being expanded in Cervo and Tortosa, in Spain. That is for the production of sole. Moving on to the next. The debt maturity profile for the next five years. If you look at the blue columns, that is the amortization of senior debt, regular principal payments. The orange is the balloon payments on debt, and the blue are the bonds. You see the striped box on top of the 2018 column. This is the bond that matured on March 19th and was repaid by drawing on a revolving credit line and thereby reducing that credit line from the $395 million that we had at the end of the first quarter by $150 million, approximately. Hence why we had such a significant liquidity position at the end of the first quarter.
That originally was funded through the bond that we did in September 2017, and you will see the maturity for that on the top blue box in 2022.
In 2018, we have a further about $160 million maturing. That is a facility we took out in conjunction with the acquisition of Jo Tankers, and that matures in November, and we expect to have that renewed in the not too distant future. I think with that, it is back to you. Key takeaways. Net profit first quarter $38 million, reflecting significant one-offs during the quarter. Continued soft market in tankers because of the new building deliveries. We expect that the remaining of 2018 will be challenging, but hoping for an improvement in 2019 and 2020. Strong demand in tank containers, solid fundamentals in terminals, and rising prices both for sole and turbot in Stolt Sea Farm. As Jens said, we continue to focus on debt reduction and cash flow improvement.
We had a one-off gain from the tax in the U.S., the group continues to have access to competitive funding and sufficient liquidity is secure. Even the bond repayment that we are going to do in 2019, if the bond market should be challenging in 2019, we have uncollateralized assets that I think we can raise $250 million-$300 million of regular debt. We are feeling comfortable with our liquidity position and the access to debt, not necessarily bonds. As I pointed out, we have invested heavily in our businesses. As I presented at the DNB Shipping Conference, I believe that with the investments that we have had in Stolt-Nielsen, our company has assets today which could grow our EBITDA to well above $600 million with realistic assumptions both for tankers and the other businesses. We are well positioned.
We have said to ourselves that until we have seen significant improvement in our balance, we are not going to take on any big acquisitions. That completes our presentation. We will now open up for questions, and we will start here in Oslo, followed with the phone. Any questions here in Oslo? Yes.
It seems like you're taking a transactional bet on the future bunker prices given that you could potentially shop. Curious to hear how you think about 2020 and the state around how you do hedging in an environment that's aged both in the one direction and the other direction. Can you start with that?
The question there was about, for the people on the phone, about the position we take towards bunker costs going forward, oil prices going forward, and also how we position ourselves towards 2020. That's the paper hedges that we took. We took the gains that we're taking is we hedged at the right time. We're taking the benefit from that. Speculating on where the oil price is at $70, if it will continue to go up. We have said is that we have 60% of our bunker costs is covered through our COAs. Our total costs, because we are what, 70%, 75% contract. The rest is spot. We will continue to have bunker clauses in almost all of our COAs. That's our main hedge for Stolt Tankers.
Taking a paper hedge bet on oil prices going further up, we haven't taken a position on. I think that $70-$75, I question if we will do any more paper hedge at this time. When it comes to 2020, I think that we are in the same ballpark as the rest of the shipping industry. We have five ships which we have installed scrubbers on. We want to see how that works before we do further investments. That's an alternative. Otherwise, it's going to be a challenge for the industry to pass that additional cost on to the customer. Buying marine gas oil will be almost a doubling of our current costs. If we are not able to pass it on, or if the industry is not able to pass that additional cost on, we all will be going out of business very quickly.
As we stand now, we are looking at the scrubber technology. We are also questioning what will happen to the diesel or marine gas oil prices. We are also looking and seeing if there is a low sulfur fuel that will be developed. As it stands now, we believe that all of our contracts that we have have included clause that in 2020 we will sit down and talk to our customers.
In terms of hedging on gasoil prices.
Sorry?
Hedging on gasoil prices. Do you plan on
We have not done that, and we have not considered doing that at this time.
Question regarding supplied time. How four units final moment?
The specialty chemicals that we carry, the bulk of what we carry, we don't believe is going to be affected by it, but it's too early for us to have an opinion on it. I received an email from our China office today saying that the Chinese are really opening up for talks to hopefully negotiate, and are encouraging, as you read in the newspaper, not to start a trade war. We have not tried to estimate what impact this is going to have for us.
How are you involved in methanol trade?
We are not very much involved in that trade, but that has, of course, an impact on our business because those ships that carry methanol will, of course, chase chemicals if they don't carry the methanol. The same, we haven't tried to speculate the impact yet. Needless to say, if there is a trade war and if there are duties being imposed, it's going to have a big impact on our industry, no doubt about it.
if you assume that the tariffs are involved.
I don't know. What do you think?
Maybe more short haul.
Yeah. Yeah. Let's just all hope that this stuff will happen. Yeah.
How much of your COA did you renew in this one?
The COAs are evenly spread throughout the quarters. It is evenly spread.
You've been doing that the same today, it will be even more challenging than it was three months ago?
There is an optimism in the market. I don't think that we will see. We did see some contracts renew the double digits in the third and the fourth quarter. I don't think we will see that. Somebody wrote that it's been leveling off. I believe so, too. I don't think that they will be going further down. We are not able to get increases at this time.
Last time you were here and talked about the tank market, that it was challenging, that you would stay profitable. Now you say, "I hope.
Reflecting the challenging market, yeah. I still hope that we will remain profitable. If we are not able to start increasing the contract rates, we will have a challenge in remaining profitable in Stolt Tankers. Of course, again, the bunker prices have a big impact on it, too. We are today at the bunker price where we are now not paying back money to our customers. We have come now to a level, as you saw, that we were getting a payback from our customers. Any other questions here in Oslo? Operator, let's see if there's anybody on the phone that has any questions.
Thank you. If you would like to ask a question on today's conference, please press star one. That's star one to ask a question. We will pause for a moment to allow everyone to signal. There are no questions on the phone at this time.
Okay. Any further questions in Oslo before I close up? Thank you very much for listening in. That completes our first quarter 2018 earnings presentation. Thank you.
Thank you. That concludes today's conference call. Thank you for your participation, ladies and gentlemen. You may now disconnect.