D'amico International Shippi Stock

Good afternoon. This is the conference operator. Welcome, and thank you for joining the Damico International Shipping Second Quarter and First Half 2026 Results Web Call. [Operator Instructions]

At this time, I would like to turn the conference over to Mr. Federico Rosen, CFO. Please go ahead, sir.

Good afternoon, and welcome to our earnings call for Q2 and H1 2026 results. As usual, I'll skip the executive summary and go straight to Page 7.

Snapshot of our fleet as at the end of June 2026. We have 28 ships on the water, six LR1s, 16 MRs and six Handys. We also have, as you know, 10 ships currently under construction, four LR1s scheduled for delivery in 2027 in the second half of next year, four MRs, MRs MR2s also called and two Handys that are scheduled for delivery in 2029. Modern fleet, 9.9 average years.

And moving to the next page. This is our situation on the bank debt front. In H1 '26, in line with our strategy, with our financial strategy that we discussed several times in our previous calls, we kept on voluntarily prepaying some of our existing debt. And we -- for $45.8 million actually in the first half of the year. And we drew down new facilities at a considerably lower cost of debt, taking advantage also of our enhanced credit merit.

And also, we also -- we have some facilities which were coming to maturity in 2027, which is also a capital-intensive year for us. As we mentioned before, we take the delivery of four vessels next year. So we also extended our maturity on this debt. So right now, we have 0 debt expiring in 2027 and a very limited amount expiring in '28 -- $13.8 million on a ship that today is worth over $54 million and $70 million expiring in 2029.

We are assuming here, as you can see in this graph, to repay debt again in the second half of this year. Actually, this is going to happen in July by tomorrow actually for $13.5 million and to draw a new facility for $16.5 million, again, at a very much improved margin over SOFR. And going into '27 and '29 in which, as I mentioned before, we will take the delivery of 10 ships, 10 new ships. We are assuming at the moment to get a leverage of 50% of the contract price that we have on these vessels.

We also show, as usual, our daily bank loan repayments on our own vessels, which tells a lot about our substantial deleveraging plan that we've been implementing. So this figure was $6,147 a day in 2019 and it dropped down to $2,050 a day as of this year.

Going back -- going ahead to the following page. Here, as always, we provide a situation of how Q3 looks right now based on everything that we have been fixing so far on the market. So we have, at the moment, 61% time charter coverage, 61% of our Q3 days at an average of $23,562. We also fixed 18% of our Q3 days on the spot market at an average of $30,900 a day. And so this entails a blended daily TCE, so the sum of the time charter and the spot components of 80% of the Q3 days at an average of $25,257 a day.

Also, we provide on the right sensitivity relative to the numbers that I just mentioned. So should we run the rest of the year, so the days that are currently unfixed at $25,000 a day, our Q3 '26 potential blended TCE would be of $25,200 a day. Should it be $27,500 a day on the free spot days, this figure would rise to $25,700 a day. And should we made $30,000 a day on the spot market on the remaining spot days, we would achieve a daily average TCE of $26,200 a day.

Following page, we show the estimated evolution of our fleet. Here, as you know, we have sold the oldest vessels of our fleet, the High Seas and the High Tide. One of this vessel was already delivered to the buyers. So it's out of our fleet at the end of June. In April at the end of April the other ship will be delivered to the buyers by November, by early November. And of course, as I mentioned, we will take the delivery of 10 ships between 2027 and 2029.

On the right up above, we show the sensitivity relative to the spot market to the spot rate. So every $1,000 a day that we achieve plus or minus on the spot market, we would make $1.7 million more or less on our bottom line. Of course, this figure rises for '27 and '28 given the fact that at least for the moment, we have a lower coverage compared to obviously 2026.

At the bottom, instead, we show on the left what our estimated net result would be should we run the rest of the year at breakeven level, which is, of course, considerably lower, much, much lower relative to where the market is right now. So assuming this, we would make a net result of $109.2 million.

And on the right, we also ran a sensitivity relative to this figure. So should we make $20,000 a day on our free days in 2026 for the remainder of 2026, our potential net result would rise to $117.6 million. Should we make $22,500 a day, we would make almost $122 million. Should we make $25,000 a day, then we would have a net profit of almost $126 million for 2026.

Next page. On the cost side, daily OpEx of $8,580 a day in H1 '26, a bit higher, 5% higher compared with the same period of last year. In reality, very much in line with our internal projections. We were expecting this. We were, of course, subject to some inflationary pressure this year and also to some higher logistic costs related to the spare part deliveries, which is very much related to where the ships are actually employed. So there are certain parts of the world in which it's much more expensive to send and deliver onboard spare parts.

On the G&A front, a very stable situation, as you can see, so $13.1 million in H1 '26, very much in line with the same period of last year. Of course, as I mentioned several times, the increase that you see relative to the previous years is due to the variable component of the personnel cost of DIS, which is obviously the reflection also of the very good years that we have been having, the very profitable years that we have been having.

Net financial position, very meaningful here. We reached at the end of H1 '26, a net cash position of $19.2 million or $21 million, excluding a small residual IFRS 16 effect. We had cash and cash equivalents at the end of the period of $231.7 million and also our financial leverage ratio, which we always calculate as the proportion between our net financial position and the fleet market value of our fleet turned negative because we are in a net cash position situation, and it's minus 1.6%. And I forgot to mention that our fleet market value was assessed at $1.28 billion at the end of the period.

Going to the income statement, we recorded a very profitable first semester of the year, $79.4 million, $105.8 million EBITDA, over 67% EBITDA margin, much higher in the same period of last year where we made $38.5 million net profit. Looking at Q2 alone, extremely strong, almost $52 million bottom line with an EBITDA of $64.9 million, which represents over an EBITDA margin of over 72%.

Next page, our key operating measures. In the first half of the year, we covered almost 64% of our days at an average of $23,600 a day. At the same time, we achieved on the remaining days, a daily spot average of $40,240 a day, leading to a total blended TCE of $31,125 a day. much stronger, as you can see, compared with the same period of last year.

Q2 2026, extremely strong on the spot market. It is a record figure for us. We achieved a daily spot rate of $57,500 a day. We also covered 65.3% of our days at $24,272, leading to a total blended TCE of $35,833 a day. And I pass it on to Carlos.

Thank you, Federico. Good afternoon. So as usual, now we continue with our CapEx commitments. And the total commitments in relation to the new buildings, 10 new buildings we ordered is of around $512 million of which around $437 million still outstanding. Most of the payments occurring in '27 when four LR1s should be delivered to us and in '29 when we should take delivery of two MR1s and four MR2s.

Purchase options on lease vessels, we still have these two vessels here that we can exercise at any moment with three months' notice. Given our very strong financial position, net cash position recently, we are now looking into this more closely. And I would say it is likely that we will be exercising one of these options soon.

Here, we just like to show that all the options we have exercised on the vessels which were time chartered in and which are today owned vessels. And it's also nice to see that relative to the date in which the options were exercised, some value was created at the time, the delta between the market value and the exercise price was around $57 million. Today, it's closer to $90 million if we compare the market value to the book value of the vessels at the end of June.

Contract coverage. Now here, there is some news because overnight, we -- we got fully fixed on a new time charter contract and extension of an existing contract for another three years. So that slightly increases our coverage for this year. It was a contract which should be terminating at around the middle of September, which was extended for three years. But it increases more so our coverage for '27, '28 and also partly in '29. So we are happy about this additional coverage, which provides us more visibility on earnings for the coming years. That's still a very profitable rate. Overall, today, we have 57% of our remaining days in '26 are H2 '26 days covered through period contracts. And we have 31% of our days in '27 covered through such contracts.

The markets. Well, as you saw from the figures just described by Federico, we have benefited from extraordinarily strong markets in Q2. The market spiked reaching record levels as is clear from the graph on the left here, the yellow line following the onset of the war in Ukraine. This spike did not last too long, but we were able to capture part of this upswing quite well through some very good fixtures. And the market corrected since then, but stays at very profitable levels.

And I would say that most recently, this is maybe not evident in this graph. In the last week, we have seen actually some further strengthening of the market. The market East of Suez is pretty flat right now at low -- mid- low 20s. But in the U.S. Gulf, it is in the high 30s, low 40s in the Atlantic Basin, let's say. So it's still very strong markets, so very profitable markets. Period rates reflect that and reflect the anticipation that these markets should stay strong, very strong for the coming year and strong, I would say, for the coming two, three years.

So asset values also have moved up markedly over the last few months and are at very high levels. So very positive outlook for the sector as seems to be indicated by these values here.

Refining margins, very strong, of course, very strong because there is a lack of refined volumes coming out from the Persian Gulf, but very strong also because of the Ukrainian attacks on Russian refineries, which have led Russia to curtail exports of certain refined products. The disruption to Hormuz oil flows has been significant since the onset of the war. There was much more oil flowing just after the MOU was signed between the U.S. and Iran. That did not last very long, unfortunately. And now volumes are back to levels that we saw in April and May. And so with very limited crossings of the straight of Hormuz.

Stocks have declined markedly, but the effect on the rest of the world was dampened by the fact that China took the brunt of this adjustment by lowering substantially its imports of crude oil since the war started by around 5 million to 6 million barrels per day. There were also 2 million barrels per day of releases of strategic reserves. But stocks, nonetheless in OECD countries did come down and in certain parts, in certain areas and for certain specific products, they are starting to reach critical levels.

Here, we see -- we have a slide here again, the situation in the Red Sea and more specifically in the Bab el-Mandab Strait is becoming again very relevant. There was an increase in crossings that we were seeing. The situation was normalizing throughout the course of this year. But most recently, the Houthis threatened to attack all vessels linked to Saudi interest. And that should entail, of course, vessels controlled by Saudi Arabia, but also likely cargo loaded in Saudi Arabian ports.

So Yanbu -- the Yanbu Port was a critical outlet for crude oil, which helped to mitigate the effects of the lost barrels transiting Hormuz. As we see on the graph on the right top-hand side here, we see that product flows from the Red Sea did not change very much after the beginning of the war, but crude oil flows going -- in particular, crude oil flows going east rose significantly from around 1 million barrels per day to 4 million barrels per day.

So with this new situation here, we are seeing that more of this crude is now being redirected through Suez and in some cases, being transported through pipelines -- through the Sumed pipeline to Egypt and then being exported from there. More of it is likely to end up in the Mediterranean, but that means that Asia will then have to import more from the U.S. Gulf. So again, very positive for ton-miles.

So this situation here is -- if it were to continue, is likely to provide a further boost to the market and further boost to ton-miles, in particular, for the crude tankers, but of course, indirectly also to the product tankers as the two sectors are linked, especially through the LR2 segment, as we have mentioned several times and as we will see later in the presentation.

The slides here confirm, you see here quite evidently how Russia's refined products exports have been collapsing lately as a result of the Ukrainian attacks. Overnight, they attacked another two important refineries in Russia. They attacked again the CPC terminal. So they are going all in, in this strategy, which they realize is being very effective at damaging Russia economically. And that is creating a lot of tightness, especially on the diesel market, which Russia used to be a very important exporter of.

And the number of sanctioned vessels on the water continues rising. Recently, another sanction package was approved by the EU. We are now approaching 20% of the overall tanker fleet, which has been sanctioned in deadweight terms. And that, of course, reduces the productivity of this fleet and improves -- leads to a stronger market for also all the compliant tonnage.

Venezuela was also a positive effect, the lifting of sanctions on Venezuela. As expected, a lot of -- a large portion of this Venezuelan oil is ending up in the U.S. Gulf. Many refineries in the U.S. were built to process this heavy crude oil that is freeing up more oil from the U.S. to be exported to more distant locations in Asia. And also the Venezuela is importing more naphtha as a diluent for the crude oil that it needs to export, and that is positive also for product tankers.

So on these slides here, we will not dwell very much into because these forecasts from the EIA are just as good as their estimates of the timing of reopening for the Strait of Hormuz. So it is very difficult for anyone to make any forecast on this matter. And here, these slides confirm that stocks have been coming down. The graph on the bottom left, the data -- it's a bit dated. The last data point is from May. But for sure, this has continued declining until the end of July, and we are now well below the last five years average.

And here, again, we show this, which has been a very important factor supporting product tankers throughout the last year and even more so since the onset of the war in Iran, there has been this huge migration of LR2s into dirty trades. As you can see on the left-hand graph, the yellow line, which has been moving up vertically, whilst there is -- there was a reduction in the number of LR2s trading clean. And that despite the fact that over the last year or so, there were many LR2s deliveries.

So here, looking at the period between January '25 and July '26, there were around 100 -- almost 100 LR2s delivered. But nonetheless, there was a reduction of the LR2s trading clean of 71 vessels. So that has tightened the product tanker market for all the other segments, and we have benefited from that. That has happened, of course, because the Aframax market has been extremely strong and has outperformed and is still outperforming the LR2 clean market.

Not much change here relative to our last presentation with the refinery additions still occurring mostly in the Middle East, India and China and Africa and which should be contributing positive to ton-miles in the coming years. The fleet continues aging very rapidly. We now approaching 22% of the MR and LR1 fleet, which is above 20 years of age, and we should be at around 25% by the end of '27.

We have today 14% order book for the -- for MRs and LR1s. So this gap between the order book and the proportion of the fleet, which is more than 20 years of age continues increasing despite quite a substantial number of vessels ordered this year. And we see on the bottom left, the fact that from '28, we have quite a big percentage of the fleet, which is reaching 25 years of age, which is the average demolition age for these type of vessels.

So even if these vessels were not to be demolished at this age, this would either indicate a very strong market or in any case, they would be trading in very marginal trades and not competing with the mainstream tankers. And that, in reality already happens as they -- in most cases, the activity of vessels is already very limited after they cross the 20-year threshold. So that has been and should continue supporting the markets.

Demolition, which had been picking up -- throughout 2025, has slowed down again markedly because of the very strong markets this year. Deliveries instead have been rising, and they should continue rising also next year. And the order book here, we see the number of vessels ordered in the first six months of 2026, and we are at almost 90 vessels on the – for MRs and LR1s. So if annualized, we -- that would be 180, which is not too far from the -- 2024 figure.

So this is something we have to keep a close eye on. The situation now is still, I would say, positive because of the rapidly aging fleet. But of course, if shipowners were to get carried away ordering vessels, that could be a cause of concern in the coming years. Here, we see that the fleet growth should accelerate next year, but what we are not showing here is the fleet growth of the sub-20 fleet. And there, the growth is much more limited and around 1%. So it's still a very positive situation also for next year.

Here, we show our NAV, the NAV -- overall NAV, which reached $1.3 billion, thanks to the positive net cash position and the fleet market value, which is approaching $1.3 billion. And so we -- at the end of June, we're trading at 30% discount to NAV today, slightly smaller discount because the shares have traded up since.

And here, we show that we have been quite generous in improving our payout ratio as we have strengthened our balance sheet. And so hopefully, we will continue -- we will be able to confirm a generous payout ratio also out of the 2026 results. And that's it, and I pass it over to you for the Q&A.

[Operator Instructions] The first question is from Massimo Bonisoli of Equita.

One question regarding the current spot earnings. If you can update us on the number on the market you see for July and in the early fixture for August, how they compare with the volatility we have seen in around Q2, which has been pretty strong considering the trends both in Atlantic and, let's say, East of Hormuz.

And the second question is on refining and downstream. Current diesel and gasoline cracks are -- at record level, never seen such a strong refining crack. So I would have expected even stronger demand on the tanker market. So if you can provide some color on that in the sense that I would have expected maybe a stronger demand. And also what I would have expected over the past few months is a level of inventories that have been drawn much faster than what we have seen from the recent data in the sense that EUR 1.5 billion of inventories should have gone over the past few months considering the Strait of Hormuz closure, whereas we don't find such an evidence of drawdown in inventories. So from your privilege standpoint, if you can give us some color on this market.

Yes, Massimo, thank you for the good questions. In terms of starting with the spot earnings, so going back to one of the slides of the presentation here where we provide an update on that. So this is what has been fixed by us on the spot market so far in Q3. So an average of $31,000.

Today, I would say that the market is not -- on average, maybe not too far from these levels, potentially depends on how vessels are positioned in the different basins. But as I was mentioning in the Atlantic Basin, usually the markets and still today are slightly weaker in the Northern Europe and in the Mediterranean, and that is what we have been seeing, although they have been improving also in this part of the world.

The market for the Handysizes, the dirty Handysizes especially has been very strong in the Mediterranean. We don't have an exposure to that market right now. Although we do have one vessel, we just finished the dry dock Handy vessel, which is going to dry dock in Turkey, and then we will have to find a new employment for that vessel. We still have to decide whether to trade it a bit on the spot market before fixing it on a new time charter.

And we are seeing instead quite a strong market in the U.S. Gulf -- currently in the high 30s, low 40s depending on the routes. And it has been -- the U.S. Gulf market, a volatile market. So you have had strong corrections and then the market has also rebounded very, very strongly. But the averages have been quite attractive. East of Suez, we are seeing a market which was -- there was -- market was quite weak recently in the Middle East. There was a bit of a glut of vessels there because vessels had positioned in that area in an anticipation of -- the reopening of Hormuz and which was expected to continue and to actually gain momentum, but there was then this resurgence of violence, unfortunately, and the closure of the trait. So vessels which were there, some started ballasting away from the area, either going to Southeast Asia to North Asia or to -- some cases actually to the Atlantic Basin. And so now that the number of vessels in that area decreased, we are starting to see some improvements in the Middle East again.

Whilst the markets which were a bit firmer in the North and Southeast Asia are still stronger than the Middle East market, they are in the low 20s, mid low 20s, but they are -- they have a more soft undertone currently because of the vessels which have ballasted into those regions recently because of the weak market in the Middle East. But overall, it's still a very strong market. I think it could get stronger if we have this positive ton-mile effect because of the closure or partial closure of the Bab el-Mandeb Strait.

Refining margins, as you correctly mentioned, are extremely strong. But sometimes that is not enough because the volumes, of course, available to be transported are much lower than they were previously. So what is compensating for that is the inefficiencies, the longer distances. But occasionally, there are moments where more product has to be kept domestically and because stocks are low also where refineries are located, not only in import countries. And that is a negative, of course, for the seaborne transportation of demand for refined products.

So you have these contrary forces at play. But overall, I think still quite a positive outlook for the market with, of course, the risk that if this were to continue for too long, it could then lead to some -- a bigger increase in the oil price and in product prices than we have seen so far, which could then have very negative economic repercussions -- negative repercussions on demand for oil products and could then end up being a negative also for our market.

So in terms of the stocks, I agree with you. I also would have expected a big decrease in -- a bigger decrease in stocks. I think that there was a big decrease in stock in China, which are, however, still at quite high levels because they came into this conflict with extremely high stocks. They were building stocks throughout last year, but they did help to cushion the blow to the rest of the world. And there was this release of strategic stocks, which means that, yes, also strategic stocks came down. And so -- but that helped to mitigate the reduction in stocks of commercial stocks.

And of course, there was in certain areas of the world, there was -- which are more price sensitive and where certain measures to restrict consumption were adopted, you have also a reduction in consumption, which helped a bit to rebalance the market and to reduce this drawdown in stocks. So the system proved much more resilient than could have been anticipated. But we are navigating in quite dangerous waters. There is a risk that at a certain point, we might reach an inflection point. where prices don't move just linearly up in a gradual fashion, but they move, there is a more important increase in oil prices. I hope I answered your questions, Massimo.

[Operator Instructions] Gentlemen, there are no more questions registered at this time.

Well, thank you everyone. If there are no more questions… There's another question.

Yes.

I would ask you an update on the dividend policy and capital allocation strategy, please.

Yes. Thanks, Arianna. Dividend policy, I would say that, yes, not much has changed. I think that we don't have a formal dividend policy, but we -- the company seems -- has decided to link the payout ratio to the deleveraging of its balance sheet. And therefore, we were able to increase the portion of profits distributed in the course of the years as we reduced the proportion of leverage in our balance sheet.

And so today, we are fortunate to be in a net cash position and the outlook for the market continues being very strong. So if things were not to change in a negative way in the coming months, we hope the company will be able to confirm a similar payout ratio to the one approved out of the 2025 results.

[Operator Instructions] There are no more questions registered at this time. I'll turn the floor back to you for any closing remarks.

Thank you, everyone, for joining the call today. Thank you for the very good questions and look forward to our next call for the presentation of our Q3 results and a good summer to everyone.

Bye. Thank you.

Ladies and gentlemen, thank you for joining. The conference is now over. You may disconnect your devices. Thank you.

Good afternoon. This is the conference operator. Welcome, and thank you for joining the d'Amico International Shipping First Quarter 2026 Results Web Call. [Operator Instructions] At this time, I would like to turn the conference over to Mr. Federico Rosen, CFO. Please go ahead, sir.

Hello. Good afternoon, everybody, and welcome to our earnings call. So jumping, as usual, to our Slide #7, nexus of our fleet. At the end of March '26, we had 29 vessels on the water, which that's 27 towing and 2 that were charter. We actually, as you know, sold one of the ships and we delivered her to buyers on the 24th of April, so now the ships on the water are 28. On top of that we have 10 vessels under construction. 4 LR1s with expected delivery in 2027, 4 MRs with expected delivery in 2029 and 2 Handys with expected delivery in 2029 as well. Average age of our fleet at the end of our period was 9.8 years. 93% of the fleet was eco-designed at the period end. And our percentage rose to 96% after the stage of the high price.

And moving to the next slide, on the net debt front we kept on executing our strategy of gradually repaying some of our most expensive debt and refinancing a portion of that with a new facility at a much lower cost of debt. So, between that and Q1 '26, we began to continue repaying that for $32.2 million in 2 vessels. We drew down new facilities for $42 million in 3 ships. I consider the lower margin over the U.S. dollar is tougher. On top of that, our strategy was also based on reusing or remediating our debt during 2027, which is also a year in which we will get the delivery, as I mentioned before, 4 LR1 vessels.

So now, as you can see, we are expecting to be active again with finances front in the remaining part of 2026, and we're basically getting to 2027 with no debt to mature. Also, looking now on the right-hand side, you can see [indiscernible] daily bank loan repayment of our own vessels, which was historically, in 2019, at $6,150 a day, and it's now $2,049 a day.

Here in Slide 9 we provide, as usual, our estimated earnings for the second quarter of the year, which has been so far much stronger than what we achieved in the first quarter of '26. As you can see, we have already fixed 21% of our days at $59,733 a day on the spot market. At the same time, we covered 50% of our Q2 days at $23,560 a day. So overall, as we speak, we're talking about 81% of our total days in Q2 '26, fixed at a blended average TCE of over $33,000 a day. So we are expecting an extremely profitable quarter at the end of June.

Next slide. And here you see the evolution. So based on the --considering also the vessels that we recently sold, we expect to have, right now, an average peak of 28.3 vessels in 2026, rising in the delivery, the expected delivery, of our 10 new building vessels to 34.7 by 2029. On the right, you see also our potential [indiscernible], our sensitivity to the spot market, the spot trade. So, as we speak, for every $1,000 a day of a higher spot rate, we -- that will translate to $3 million more on our bottom line. And, of course, we see the increases for '27 and '28 since our coverage is lower, as we speak, for those years. And right now, we have a sensitivity of approximately $8 million for '27 and $11 million for '28.

On at the bottom of the slide, interesting graph on the left. So based on everything that we have fixed so far, both in terms of time charter and spot market, we [indiscernible] the rest of the year at a breakeven level. We would make a net result at the end of the year of almost $83 million. And the same goes for [indiscernible] '27, and the figure would be $16.5 million already.

Then on the right, we also show a sensitivity compared to the figure that I just mentioned. So should we run the remaining free days of '26 at an average of $20,000 a day, then our net result for the year would be of almost $98 million. Should we run it at $22,500 a day, the net result would be $105 million. Should we make $25,000 a day on the remaining free days of the year, then our net result would be even higher, to $112.5 million.

On the cost front, it's always not particularly meaningful to look at the OpEx costs on a quarterly basis. Anyway, we saw a slight increase in Q1 '26 relative to the same period of last year. So we had daily OpEx on our fleet of $8,600 a day. The reason for this more increase relative to the same quarter of '25 was driven mostly by higher crew expenses and insurance costs.

On the G&A front, we actually had a total cost of $5.3 million in the first quarter of the year compared to $6 million in Q1 '25. So a slight increase of approximately $700,000. Again, here is the increase. And as we mentioned, this is the main time to increase. As you can see here, compared to the previous years, it was due to the higher personnel compensation, which is directly linked to the strong financial performance that has been achieved in recent years.

Net financial position. So, very strong net financial position at the end of the quarter. We had a cash equivalent of $189.6 million. Net financial position of $25.8 million. This includes a small tax arising from the application of IFRS16. Our net financial position was of $23.8 million. And that compares to a fleet market value assessed by one of the top shooting brokers of the ability of $1.2 billion.

So, the ratio between our net financial position and our fleet market value at the end of March '26 was only 2%. I'd like to remind you that this ratio was almost 73% at the end of [ 2008 ] when we started executing our deleveraging plan over the last few years.

Opening slide. On the income statement side, we generated in the first 3 months of the year a net profit of $27.5 million compared to $18.9 million in the same quarter of the previous year. Very strong. These are almost $41 million, which entails an income margin of 50.5%. It's pretty strong. Excluding some small nonreported items, we achieved an adjusted net profit of $26.8 million in this quarter of the year compared to $19.2 million in 2025.

Key operating measures. We achieved a daily spot rate of $32,264 a day in the first quarter of the year. This year it was actually 90% higher than the last quarter of '25, which was already the best quarter of 2025. And 53% higher than the first quarter of 2025. At the same time, we covered 62.2% of our total days of the first 3 months of the year, averaging $23,000 a day. So our total [indiscernible] was $26,500 a day for the first quarter of the year. All I'll pass it on to Carlos.

Good afternoon. So as usual, we now continue with our CapEx commitment, which in relation to our investment plan comprising 10 vessels amounts to $512 million and with outstanding commitments of around $137 million, most of these are made -- planned for '27 and '29, coinciding with the deliveries of the vessels. In '27, we will be receiving 4 LR1s and then in '29 2 LR1s, 4 MR2s, all ordered at first class Chinese ships.

In relation to the options on the lease vessels, well, the recent movement in forward interest rates makes it less likely that these options will be exercised this year. Both of them can be exercised at any point in time with 3 months' notice. We continue monitoring the situation. And when a window opens up for us to exercise them, generating value for the company, we will do so. Here we show the difference between the market value and the exercise price at the exercise date of the options we exercise on the 6 vessels, which were previously time-chartered in. And we also showed today the difference at the end of March, the difference between the market value and the book value, which is even higher than this difference was at the time of exercise. So far, the exercise of these options has generated substantial value for the company.

In terms of contract coverage, we now have 55% coverage for 2026 at an average rate of $23,400, slightly higher rate of $23,500 for 2027 with, however, a much lower coverage of 23%. The fleet is increasing the eco, as mentioned by Federico, we only have 1 non-eco vessel in our fleet which we plan to sell by the end of the year.

In terms of freight rates, well, as already highlighted by Federico, the fixtures in Q2 has been extremely strong, reflecting the very strong spot market as seen from the graph on the left-hand side of the yellow line, which is -- which depicts [indiscernible] clean earnings, which is at record levels. And of course, also the short-term TCs or new TCs have reached record levels. Asset values have moved also up older vessels by a higher percentage, new buildings, not that much, but there was also an uptick in new building prices.

And here, well, this is the major contributor to the exceptional market. But of course, this is -- the Iran conflict is being layered upon other geopolitical factors, which were already supporting the market as well as strong underlying fundamentals of the sector. So it added more fuel to this rally, and you see refining margins, which at very high levels, especially for certain products like jet fuel and diesel. And creating arbitrage opportunities that are not always open on all routes. They open and close, but they are there. This is creating quite a lot of volatility also on rates, on spot rates in different regions.

As the conflict started, we saw a very strong market West of Suez and weaker -- much weaker market East of Suez, things moved west today. There's not that much difference between the average rates that can be achieved in both basins. The disruption because of the war is very significant. There were around 20 million barrels per day transiting the straight last year on average of oil, crude and refined products. And the beginning of the first 2 months of this year, the figure was even slightly higher, around 21.

During the conflict, there were moments where there was quite a lot of volatility in the amount of oil that transited. There were some brief moments where more vessels were able to transit. But on average, just under 2 million barrels per day were able to transit through Hormuz during the period. And 4 million barrels per day were redirected with pipelines to Yanbu or to Fujairah or Ceyhan, therefore creating a net disruption of around 14 million barrels per day of lost flows. This was then compensated by the -- partly by releases by the EIA of the announced release of 100 million barrels, which, however, is being injected into the market at a rhythm of around 2 million barrels per day.

And also by a drop in demand, of course, which is starting to become quite pronounced and is linked both to the high prices affecting demand for the more -- for the products where there is a bit more elasticity of price, elasticity of demand. Generally, they are quite elastic, but also measures taken by certain governments in particular in Asia to reduce consumption. And of course, the delta is being met through reduction in stocks, which were quite abundant in particular in certain countries before the conflict started. So this, as we will see later, has helped the market so far, but it is dangerous. And as the stocks start reaching critical levels, there is a risk that oil prices could rise much faster than what we have seen so far, and that economic activity could be more -- much more severely impacted than what we have seen so far.

So -- and I like to highlight that, I mean, from our perspective, the reopening of the Strait would be a positive because we are more concerned about the closure of the Strait for too long because of the negative associated economic consequences. But the reopening then should create some pent-up demand for our vessels at least in the beginning to rebuild stocks which were depleted during the conflict at a very rapid pace.

Well, these are factors which have supported the market throughout last year and which explains the strengthening market that we saw throughout last year and beginning of this year before the conflict started. So there was a lot of oil being pushed into the market, but also a lot of inefficiencies because of the tougher sanctions that were being imposed on vessels trading Russian and Iranian and Venezuelan barrels. And therefore, we saw this sharp increase in sanctioned oil and water last year and a huge increase in the number of vessels sanctioned, which reached over 1,000 vessels, representing 19% of the overall tanker fleet in [indiscernible].

So we are now starting to see this unwinding. So we see that sanctioned oil on water has been falling also because there were temporary waivers provided for the sanctioned oil to be discharged because of the war in Iran. So initially, these waivers were provided to Russian oil, but then also to Iranian oil. And the Red Sea disruptions was very supportive in the first 9 months of '24, but as mentioned, this became actually a headwind for the market afterwards because the higher cost of the longer routes through Cape of Good Hope and the products were traded more regionally and ton miles actually declined thereafter because of this disruption.

Venezuela, this is a positive for the market. This oil used to be transported on sanctioned vessels. So now it's being transported on compliant vessels. It is very beneficial, in particular, for the Aframax sector, which are the most suited type of vessels to transport these cargoes out of Venezuela. But it directly benefits also the product tankers transporting PCP through the well-known transmission mechanism that we will see later, whereby we have seen a lot of LR2s transiting into dirty trades.

And here, this was -- this is the forecast that we -- by the U.S. Energy Information Administration of the production of Venezuela for '26 of 1 million barrels per day. Actually, I have seen a report recently where it indicates that the production has already reached 1.2 million barrels per day, so surpassing these estimates. The returning to the production levels of the late 1990s will take time, most likely, but this initial ramp-up was faster than anticipated.

So Russia's refined product exports continue declining, although seeing at quite high levels, both as a result of the tougher sanctions that were imposed and larger number of sanctioned vessels, but also as a result of attacks by the Ukrainians with drones to export facilities, Russian export facilities. So it creates usually not very significant damage, but it does hamper their ability to export products. And we have seen these attacks occurring on a quite frequent basis and it's creating a further obstacle to Russian exports.

Here, well, these are the estimates of the EIA in terms of demand and throughputs, refinery throughputs, sharp drop in demand as what we expected and in Q2, and a very sharp drop in refining volumes in particular in April with a recovery thereafter. Of course, it's very difficult to make such forecast in this environment. A lot will depend on how the conflict with Iran evolves in the coming weeks.

Also in terms of oil supply, very difficult to make forecast. I mean this was a market which was very well supplied. It was expected to move into contango during the course of this year. And now we are faced with the opposite situation with a very undersupplied market as just mentioned.

Inventories were at good levels before the war started, and we are already seeing this drawdown here in the floating oil and total oil at sea, which has been declining over the last 2 months at quite a fast clip. And here we see this previously mentioned transmission mechanism between the dirty and clean markets with an increasing number of LR2s trading dirty as depicted by the yellow line on the graph on the left and rapidly declining number of LR2s trading clean despite the quite fast deliveries of LR2s last year and in the beginning of this year. And this is because, of course, of the very strong markets, the dirty markets, the Aframax rates, which are still at very high levels.

And in terms of refinery landscape, there's not much new here. There were important closures of refineries in the Americas and in Europe over the last few years and with new refinery capacity coming online in China, the Middle East and other Asian countries, in particular in India. So this increase in ton miles as Europe and the Americas to import more from these more distant locations.

The fleet on the supply side continues aging rapidly and the order book on the MR and LR1 sectors, which are those we operate in after peaking at the end of '24 has started declining despite there being orders continuing to come in, but at a lower rate, at a lower rate relative to the delivery of new vessels. So at the end of March, this order book had declined to 13.5% relative to almost 21% of this fleet, which has already more than 20 years of age. So important to note that by the end of '27, the portion of the fleet, which is more than 20 years of age will have risen to almost 25%. So a very sharp increase which bodes well for the market also next year.

This is not surprising this percentage, which is rising of the fleet, which is crossing the 20-year threshold because it is aligned with the graph at the bottom where we show the vessels reaching 25 years of age. So the vessels which will reach 20 years of age in '27 are those that will be reaching 25 years of age in 2032. And we see here by this graph that this represents 7.7% of the fleet, around 10 million deadweight. So a very big number and portion of the fleet reaching 20 years of age already next year and starting to trade in more marginal trades.

The picture is not as favorable if we look at across all tankers, including also crude tankers because there has been quite a lot of orders coming in for crude tankers over the last few months. So here, the order book rose to 20% and is now pretty much aligned with the portion of the fleet, which has more than 20 years of age. We can have a strong product tanker market even without a strong crude tanker market. But the opposite is not true. I mean, a strong crude tanker market will eventually generate strong product tanker market. That is because the crude tanker market is much bigger than the product tanker market as you see looking at the left-hand axis when we include also the crude tankers that the fleet size is much, much bigger than if we look only at product [indiscernible].

We look here at the deliveries, which has been accelerated. The positive thing to highlight here is that most of the deliveries, the quarter with the largest number of vessels to be delivered was Q1, and that is already behind us. And we are still in an extremely strong market despite this huge number -- quite large number of vessels, I would say, delivered in Q1. And if you look at deliveries in the coming quarters, they're actually not too dissimilar from what we saw in the last 2 quarters of the last year. In particular, if you look at Q4 '26, there are 75 tankers being delivered relative to 71 in Q4 '25. So very, very similar number of vessels.

And here, you look at the vessels that were ordered in the first 4 months of this year, 28, which annualized puts it pretty much on par with just over 80 vessels ordered in '25, which is quite a low number compared to the over 200 vessels ordered in '25 and over 150 in '23. And also -- and especially relative to the over 200 vessels, for example, ordered in 2013 when the fleet was much smaller. So these 225 vessels ordered in '13 represented a much bigger portion of the fleet than, for example, the 200 vessels ordered in 2014.

And the fleet growth is accelerating. But as I mentioned, the sub-20 fleet growth even in '26 across all factors is actually less than 1%. So this is supportive for the market this year and will be supportive also next year because next year there are even more vessels turning 20 years of age.

Our NAV has been rising. NAV per share at the end of March was at around $10. And our discount at the end of the quarter was 14%. And today, it's even lower than that. So below 10%. Of course, this relative to the 31st of March NAV, but this is a moving target. We know, for example, that some of our vessels that were valued at the 31st of March at a certain level today would be valued more because there were some transactions that happened afterwards for vessels which are very similar at higher levels than the valuations we received from the broker at 31st of March, not much higher, but still higher. And of course, we also generated a lot of cash in April this year.

And finally, here in terms of our payout ratio, it has been rising throughout the last few years in quite a regular fashion with the 55% payout ratio out of the 2025 net results, which is the highest payout ratio we have had. And of course, the balance sheet also which strengthened significantly as previously mentioned by Federico.

So that's it, and we pass it over to the Q&A. Thank you.

[Operator Instructions] The first question is from Massimo Bonisoli of Equita.

2 questions. One on the Strait of Hormuz reopening. Could you elaborate on the minimum safety and operational conditions required for d'Amico to resume transit through the Strait of Hormuz in the sense that there are plenty of situation to be cleared and we still don't know when the Strait will open for commercial traffic.

And the second question is on the spot rate evolution, referring to your Slide 9 of the presentation. Spot fixed for in April were running close to $60,000 per day. Could you provide some color on the trends seen so far in May? And on the current environment. Based on the latest contract concluded or under negotiation, do you expect the average realized spot rate in Q2 to remain around these levels? Improve further, maybe normalize somewhat versus free peaks?

Two good questions. So in terms of the transit through Hormuz, we are not going to be the first one venturing in that. I mean we have to make sure that our main priority will be the safety of our crew. So an assessment will have to be made that the passage is safe. And of course, we will need to be able to ensure the risk, which will be reimbursed to us by the charter. But there are situations like this, also exclusions to the policy, which can mean that you are still exposed to quite a lot of risk. So we will assess this very carefully. And there's also the risk of mines still. So there has been some demining happening. But we don't know to what extent this has been -- this has progressed and it's near to completion. So we will take a prudent approach in that respect and try to employ our vessels in other regions initially.

One port which we could consider calling initially could be the Port of Duqm, which is close, but outside the Strait of Hormuz, for example, and which is also where are -- there's also an important refinery which exports significant amounts. And so that could be something we could consider. But we would be very prudent in that respect.

In terms of the rates, achieved the almost $60,000 that we have shown for Q2 so far includes also some fixtures that run into May. The latest fixtures, I would say, are at slightly lower levels than that on average. But they are still at very good levels. I mean today, the spot market is still above $30,000 in both basins in both East and West. There was more of a correction west recently. But I believe it is a temporary correction. This market in the U.S. Gulf has always been very volatile.

For example, the arbitrage for exporting naphtha out of the U.S. Gulf closed momentarily a few weeks ago. It had -- as we have shown in the presentation when we approved our year-end results, it has risen to record highs. And thereafter, it collapsed to levels which were lower than those we had before the conflict started. And now it's starting to move up again. And analysts believe that it could in the coming weeks rise further and possibly return to those very high levels we saw because there's going to be an important need to import petrochemicals into Asia if Hormuz doesn't open up in an important way soon.

So very hard to forecast what will happen. Of course, if there is a reopening, then we expect a big surge in freight rates east of Suez because we will be seeing more exports out of Hormuz, transiting Hormuz. But not only, I think also China will then, of course, be exporting much more. China initially after the conflict started stopped exports of refined products. As a result, its stocks rose and are very abundant right now. And it recently declared that it will already even without the Hormuz reopening start exporting again in a more limited way to certain countries. It's going to be -- it's more of a political move also to support some friendly countries which are suffering in this moment.

But that in itself already should help the market in the North Asia region in the coming weeks. But with the reopening of Hormuz then we should see a normalization of Chinese exports. So even bigger volumes coming to market as well as, of course, a lot of volumes coming out of Hormuz.

Potentially if the reopening -- if the passage of the straight is being saved by all, very large flows coming out of almost because bank storage in that area is full. So they have a very strong incentive to push out product very fast, out of that region. So -- and we don't have a lot of vessels there because we have all these vessels that move into the Atlantic Basin. So we expect that basin to strengthen a lot. So again, this dislocation, which on a net basis will be positive for the market. The market should come down in the U.S. Gulf, but net-net, I think it will be positive for the market. So I'm quite positive, but it's very difficult to make forecast at this moment. I think that's it in terms of answers...

If I may squeeze in another question, Carlos. Just to understand how your fleet is positioned between east and west of Hormuz right now?

We want to -- it's very difficult to read and to make calls. So we are trying to keep quite a balanced allocation of the fleet, a few vessels in the Americas, some trading in West Africa and then a similar number in Asia trading out of mostly Southeast Asia and the North Asia out of Korea and out of Singapore. We have done some Australia runs recently. There was an increase in demand into Australia of refined products. There was a fire in an important refinery in Australia. So there's also a seasonal uptick in demand now before the winter season there, which was then also associated with an additional demand because of this fire in this refinery there. So yes, so I mean, whatever happens, we should do quite well.

The next question is from Climent Molins, Value Investor's Edge.

The next question is from Matteo Bonizzoni, Kepler Cheuvreux.

I have a quick question with regard to your capital allocation flexibility, let's say. So I would like to know if the current market environment, which is probably above what you had -- what everybody had in mind in terms of rates and profitability and cash flow could have implication on dividend policy or buyback or also on the feasibility to further expand the fleet after the recent, I mean, decision which you have communicated on the new buildings. But I mean, you have clearly more room to go potentially. So I would like to know what are your current thoughts as regards future capital allocation choices?

Thank you, Matteo. No, look, I think that at this moment, there isn't -- the very strong market should not affect our policies in this respect. We will, of course, look very carefully when we are closer to the end of the year what could be the dividend policy out of the '26 results. If the market is as strong as it looks it will be this year, then it is then that we will be able to confirm a similar payout ratio that we had in 2025.

Also in terms of buyback, we will only do it very opportunistically if we see some very substantial unjustified weakness on the share price. And the fleet-wise, we don't expect to make other investments at this stage. We are quite happy with the 10 vessels we have ordered. But if opportunities were to arise, more because of an unexpected correction, which creates an attractive entry point, then we might decide to take advantage of that.

But with the 10 vessels we have ordered today, we have 28 vessels on the water. That represents quite a big percentage of our fleet, over $500 million in investments. So we don't feel we need to do more, but we will look at opportunities if they arise.

The next question is from Climent Molins, Value Investor's Edge.

Most has already been covered, but has the recent increase in asset prices changed your view on potentially exercising the purchase options on the high fidelity and high discovery before than previously expected?

Yes. The purchase options on the fidelity discovery is -- the decision is more linked to the interest rate environment from our perspective because these are fixed rate financing transactions which were done at the time where interest rates were very low. So of course, the implicit margin in these deals is high relative to what we can achieve today, but the implicit swap rate is set very low.

So the all-in cost of financing on these deals is actually quite competitive still today. And we would need interest rates to move down more for the forward interest rate curve to make the exercise of these options attractive. Otherwise, for us, it is probably more convenient to reimburse some floating rate debt that we have, which is costing us more than these facilities here. So that is our thinking today.

I mean, of course, we have the necessary liquidity to exercise these options, but there are also other things we can do with the liquidity that is potentially more attractive for us. So we will only exercise them if we see this decrease in forward rates.

[Operator Instructions] Gentlemen, there are no more questions registered at this time.

Thank you. Thank you, everyone, for participating in our call today and look forward to seeing you soon when we approve our Q2 results, and good afternoon. Thank you.

Thank you. Bye-bye.

Ladies and gentlemen, thank you for joining. The conference is now over. You may disconnect your devices. Thank you.

Good afternoon. This is the conference operator. Welcome, and thank you for joining the d'Amico International Shipping Full Year 2025 Results Web Call. [Operator Instructions] At this time, I would like to turn the conference over to Federico Rosen, CFO. Please go ahead, sir.

Thank you. Hello, everyone, and welcome to d'Amico International Shipping Full Year '25 Earnings Call. Skipping the executive summary and going directly to the snapshot of our fleet. We have right now 29 ships on the water, of which 6 are LR1s, 17 are MRs, and 6 are handy vessels. 27 of these ships are owned vessels, while we still have 2 ships in bareboat charter. We also have, as you probably know, 10 ships under construction, 4 LR1s with expected delivery in 2027, 4 MR with expected delivery in 2029, and 2 Handys with expected delivery also in 2029. Young fleet of 9.6 years compared to an industry average of almost 15 years for MRs and 16 years for LR1s. 93% of our fleet is Eco compared to an industry average of 40%. And basically, looking at our fleet, now only 2 ships are not Eco vessels.

Moving to the next page on the debt side. You probably read our recent press release. We were quite active on the bank loan front, bank debt front. So as you know, we just repaid about $82 million of some old loans that we had, and we drew down new facilities for approximately $83 million at a considerably lower margin over the U.S. dollar SOFR. So right now, we have a weighted average spread on SOFR of only 1.6%, which is a very low number for us. And also the average duration of our debt was -- the average remaining maturity of our debt was 3.3 years at the end of September, and it is now 4.9 years. We also had a big chunk of our debt expiring in 2027, which is a crucial year for us because it's also when we expect to get the delivery of the ones that I just mentioned before. And we basically refinanced that debt now have just $10.9 billion of debt coming to maturity in 2027. This figure was $67 million before these transactions.

On the right-hand side, you see also the evolution of our daily bank loan repayment on our own vessels, which was $6,100 a day in 2019, and it dropped to $2,446 a day in 2025, and we are expecting to be even lower in 2026. Moving to the next slide. As usual, here, we provide a rough guidance on Q1 '26, which, as you can see, looks very profitable. In addition to our time charter coverage of 63% at an average daily rate of $23,300 a day. We also fixed 35% of our days on the spot market at almost $33,100 a day. So the overall blended daily TCE as the sum of the time charter and the spot exposure, it's about $26,800 a day for approximately 98% of the Q1 days.

We also provide here a sensitivity of the remaining few free days or unfixed days for Q1. So should we make on those days $25,000 a day, our potential blended TCE would be of $26,780 a day. Should we make $27,500 a day, our total blended TCE would rise to $26,831 a day. Should we make $30,000 a day, it would be slightly less than $26,900 a day. Strong earnings outlook. We provide, as usual, the estimated evolution of our fleet as it is right now. So as I mentioned before, we have now 29 ships on the water, and we're expecting to keep the same average in 2026. And of course, here, we provide also the evolution of our fleet, assuming not to sell any further vessel and including the delivery of the 4 LR1s in the second half of '27 and 4 MR2s and 2 Handys in 2029.

On the right, up above, we provide a sensitivity for every $1,000 a day on the spot market, which is now $3.8 million for the spot days of 2026 and rises to $8.3 million for '27 and $11.7 million for '28. Looking at the bottom graph, our estimated net results based on the fixed contract days, both on the spot market and on the time charter side of our business and assuming basically to run at breakeven level for the remainder of the free days, our estimated net result will be $60.7 million in 2026 and already $16.1 million for. On the right, we also show a sensitivity for the free days that we still have. And should we make $20,000 a day in these free days in 2026, our net result could be potentially be slightly lower than $80 million. Should we make $22.5 on the free days, our potential net result will rise to $89.3 million. And should we make $25,000 a day over the remaining free days, our potential net result could be slightly lower than $100 million for 2026.

Moving to the next slide on the cost side, we had OpEx of $8,129 day which is approximately 5% higher than the same than in the previous year. Here, we had some higher than expected technical costs, which are mainly related to some higher logistics costs to deliver spare parts to the vessels around the world. So it is really related to the specific areas of the world where our vessels were -- on the right, instead, we show our G&A, which were $26 million for 2025, quite similar to what we had in 2023, a bit higher than the previous year, and these are mainly the results of some higher variable personnel compensation, which is really the result of our strong financial performance in recent years.

Net financial position, extremely strong net financial position. We had cash and cash equivalents at the end of 2025 of $183.9 million, net financial position of $27.4 million the effects of IFRS 16, it was $25.2 million compared to a market value of $1.65 billion. So our leverage -- our financial leverage calculated as the ratio between our net financial position and the fleet market value was of only 2.4% at the end of 2025. And I would like to remind that this figure was almost 73% at the end of 2018. On the income statement side, -- of course, very profitable year, $88.4 million, of course, lower than what we achieved in 2024 when we made $188.5 million. This is really the result of a spot market in '25, which was still extremely strong, but not at the same peaks that we achieved, especially in the first half of 2024. However, still extremely strong performance.

We had an EBITDA of $152.7 million, which is basically corresponds to an EBITDA margin on the net revenues of 57%. Q4 '25 was very strong for us, better than the same quarter of last year and the best quarter overall in 2025. We achieved a net profit of $25.6 million in the -- on the right, excluding some nonrecurring items, which for 2025 were mainly related to an asset impairment that we booked on some of the old ships that we sold during the year, ships of $3.8 million. So excluding this effect, together with a few nonrecurring financial items, our net result -- our adjusted net result for 2025 was $91.6 million and our adjusted net result for Q4 '25 was $24.5 million.

Key operating measures. We achieved a very strong daily spot rate in Q4 '25 of almost $27,100 a day best quarter of the year. You can see the constant rise in quarter after quarter of this TCE spot during the year. Overall, we achieved an average for 2025 of $24,228 as the average for the whole year. We had also a contract coverage of 50.7% in the year at an average of $23,600 a day. So overall, we achieved a blended TCE of slightly less than $24,000 a day in the full year '25. And as I mentioned before, Q4 was extremely strong, reaching a blended TCE of almost $25,000 a day. And I pass it on to Carlos.

Thank you, Federico. Good afternoon. Here, we look at our CapEx commitments. So this is both historical and future, and this has been rising over the last few quarters as we have ordered more vessels. So as Federico mentioned, our order book today consists of 10 vessels, 4 LR1s, 2 MR1s, and 4 LR2s for which we have outstanding commitments of $468 million with '27 and '29 being particularly important in terms of CapEx commitments and lower amounts in '26 and '28. The lease vessels we have, the Fidelity and Discovery are still the same. We have been waiting for the right moment to exercise these options. The interest rates and these are fixed rate cost financings and interest rates have been taking longer than anticipated to come down. Inflation has been taking longer than anticipated to come down and the latest geopolitical developments could further delay this decrease in interest rates and therefore, further postpone the exercise of these options. We continue monitoring the situation, of course, to exercise these as soon as we deem it convenient to do so.

In relation to the time chartered-in vessels that we have already exercised at the time of exercise, the difference between the market price and the exercise price was around $57 million. Following their exercise, this delta decreased slightly relative to book value, but it's still very substantial at $49 million, the difference between market value and book value at the end of 2025. We have a good level of contract coverage for '26 as communicated to the market through a press release. We have now 54% of our '26 days covered at around $23, -- our 27 days are covered at a similar level at 22% of the available days. So our fleet is increasing the Eco, and we now have around 93% of our fleet. Only 2 vessels are non-Eco in our fleet today. Coverage does fall throughout the year. It's very high in Q1, 63% and then it gradually falls. We are quite happy with the coverage we have today. But as the year progresses and this coverage falls, we will be looking possibly for new opportunities to cover the last quarter, especially of '26 and '27, where we have lower coverage levels.

And here, we see the -- we see that what has happened with the spot rates and TC rates and asset values. The yellow line on the graph on the left is the average of the market clean earnings. And according to this time series, these earnings are now at a record level. And this reflects, of course, the major disruption caused by the Iran war and some very important arbitrages, which opened up and the sharp increase in refining margins that are associated with this conflict. And as we will see later in the presentation, it's also important to highlight, however, that this improving trend in freight rates started actually quite some time ago, and we have seen freight rates improving throughout 2025, as was also highlighted by Federico when he communicated just now our averages for the spot market throughout last year, which -- where we saw this improving trend throughout the year.

Asset values have also moved up, not so much newbuilding prices, but especially 10-year-old vessel prices on a percentage basis, they have moved up very markedly, but also 5-year-old vessel prices moved up significantly. The disruption caused by the war in Ukraine, well, we have been talking about this for some time now. What we have seen throughout '25 is a gradual decline in Russian exports. The trough we see here in October is linked to -- also to refinery maintenance. And that explains also why there was then an uptick in the last few months of the year. But the declining trend, however, is confirmed, and it is associated with the more stringent sanctions on vessels and also the new sanctions imposed on the oil producers, Lukoil and Rosneft, which are the 2 most important oil producers in Russia as well as the 18 sanctions package by the EU, which prevents import of refined products produced with Russian crude into Europe. So -- and of course, this declining trend is also linked to the attacks by Ukraine on Russian refineries and export -- oil export infrastructure.

There is now because of the tightness in the oil market linked arising because of the war in Iran, a temporary relief on these sanctions for 30 days, at least by the U.S., which, however, these sanctions are most likely to be reimposed in full force once the Iranian conflict ends. The Red Sea attacks, as mentioned a few times already, they were a very positive effect for our market in the first part of 2024, where we saw this quite big increase in ton miles as highlighted here by the yellow horizontal line, which shows the average for the first 9 months of '24, which is much higher than the average ton miles in '23. Thereafter, however, we did see a decline in these averages in Q4 '24 and then a further decline in '25 and in the beginning of '26 as more product was traded regionally because of the higher costs associated with sailing through Cape of Good Hope.

Not only ton miles decreased overall for along this route, but also a large portion of the product that was transported was transported on larger non-coated vessels on VLCCs and Suezmaxes, which quite exceptionally also cleaned up to transport clean refined products. That's very unusual. It's quite expensive and risky to do so because also the risk of contamination. But the economics, the incentives for cleaning up were very big. and therefore, some trading houses and some more risk-prone shipowners decided to do so. With the strengthening of the crude markets that we saw throughout 2025, these cleanups became less frequent. So after peaking in Q3 '24 at around 12%, the share of clean products transported on uncoated vessels declined quite markedly. It has been volatile, but it is much -- at a much lower percentage than it was in Q3 '24. And this is not surprising. What we have seen actually is the opposite effect is we have seen more and more LR2s trading dirty to transport dirty petroleum products because of the strength of the dirty markets as we will see later in the presentation.

So tougher sanctions have led to an increase in the sanctioned oil on water. It is becoming increasingly difficult for this sanctioned oil, which is loaded on vessels to then be discharged. This leads to inefficient practices such as ship-to-ship transfers, which have led to this sharp increase in oil on water and sanctioned oil on water. And we see that the number of sanctioned vessels has risen sharply starting in April '25 and thereafter, this trend has continued. And we now stand at around 16% of the total tanker fleet that is sanctioned with some segments like Aframaxes where this percentage is as high as 30%.

Venezuela, another geopolitical factor, new one that has been influencing the market very much. And we see here that Venezuela used to be a very important oil producer in the '90s, in the late '90s, they used to produce more than 3 million barrels per day. And since Chávez and then Maduro came to power, the neglect of the oil industry led to a sharp decline in oil production starting in 2016 -- and last year, their production was of only 1 million barrels per day. There is scope for this production to increase. They have the biggest oil reserve in the world. The big question mark here is if oil companies will want to return to Venezuela and to what extent make the necessary investments to ramp up this production. It will take time. Nonetheless, this oil, which is a very heavy oil will most likely a large share be sold to U.S. refineries, which, in many cases, were built to process this type of oil. And however, that will free up more space for the U.S. to export more of its own crude oil to the rest of the world. And more importantly, it will increase demand for compliant vessels because a lot of this oil was transported on sanctioned shadow fleet vessels, and it will now be transported on compliant vessels. So this will be positive for the market.

We started seeing the positive effects of this on the market prior to the beginning of the Iran war, the Aframax market, which was already very strong, became even stronger as a result of the sanctions being lifted. And that drew in even more LR2s into these dirty trades, tightening the supply-demand balance for the transportation of clean petroleum products. And then here, we have this new slide here where we could have included many more slides on the presentation. But unfortunately, we don't have enough time to cover this that in depth, but because there are many other topics which are also influencing the market. But yes, the Iran war, of course, is a major disruption. There are almost 19 million barrels between crude and refined products, which used to transit through Hormuz, so around 18% of total oil supply, 25% of seaborne oil volumes. So there is the potential to reroute through some pipelines part of this production around 3.5 million, 4 million barrels per day, but that leaves still a deficit of around 15 million barrels per day and lost oil output, which cannot be easily replaced. So that is a huge deficit. And of course, it led to an important spike in the crude oil price and also because of the lack of the refined volumes, a huge spike in refinery margins.

And as I mentioned previously, it led to the opening up of some important arbitrages, in particular, that for naphtha from the West of Suez to the East of Suez, where the profitability of this trade rose significantly and justifying the traders paying very high freight rates to transport these products from Europe or from the U.S. Gulf. -- to Asia and to China, in particular, which has been rapidly developing its petrochemical industry. 40% of the seaborne naphtha originated from the Middle East Gulf. So that explains why there is such a large deficit in this particular product. And therefore, what we have that in these new arbitrages, this sharp increase in refining margins is the factor which have driven freight rates on certain routes to record levels. We don't know -- we don't have -- it's very difficult to estimate how long this this work can last to try and rebalance a bit the market. The IEA announced yesterday that they are going to be releasing 400 million barrels of oil from the strategic petroleum reserves. That is a very significant amount. It's an important portion of the total strategic reserves of 1.2 billion barrels. I understand that it will be difficult to inject into the market more than 2 million barrels per day. So if they were able to inject the full deficit of 15 million barrels per day, this would equate to around 25, 26 days of -- would cover 25, 26 days of lost output because of the Iran conflict. But at the rate of 2 million barrels per day, -- it would take 200 days for this amount to be released into the market. But more importantly, it will only compensate for one fraction of the -- of the lost output because of the Iran war. So it is not enough to rebalance the market, unfortunately, which highlights the importance of finding a resolution as soon as possible for this conflict.

Going back to the fundamentals, oil demand continues growing, although at a slightly lower pace than in the previous years, but it almost -- it grew by almost 0.8 million barrels per day in '25 and was estimated by the IEA in its latest report to grow by almost 0.9 million in '26. But of course, the most recent developments linked to the Iranian war could substantially affect these forecasts. Refining throughputs after rising by 1 million barrels per day last year, so much more than actually initially anticipated by the IEA, where they were initially expecting an increase of only 0.6 million barrels per day is expected to increase by another 0.8 million this year. And more importantly, this output growth is happening mostly in non-OECD countries. and in countries, a lot of that is geared towards exports. So Middle East, Asia and Africa. And oil supply was abundant until not long ago. The oil supply grew by, on average, 3.1 million barrels per day in '25 and by another 2.4 million barrels per day. It was expected to grow by another 2.4 million barrels per day this year. Of course, once again, here, the Iranian war completely changes this outlook here. So it will, of course, crucially depend on how long the war lasts, but also on the damage that was done, that will be done to infrastructure, oil infrastructure in these countries. how that will affect their future ability to export oil.

We were expecting the forward oil price curve to move into contango if the excess oil supply picture continued this year, but this changed dramatically now and the oil prices rose sharply and the curve now is in steep backwardation. This is a bit dated. Of course, oil price is moving very fast. So -- but this is more or less the shape of the curve today and oil inventories are a bit above the 5-year average, but not very significantly. The growth in oil has been mostly at sea and mostly the sanctioned oil at sea as we saw -- in terms of demand growth, jet fuel is expected to be -- continue being an important contributor for oil demand growth, but also gas oil and diesel oil. Here, we show -- this is the trend that we were seeing of growing imports of naphtha into China. And as you see by the yellow bar here, which shows the imports coming from the Middle East, it confirms that there was a large portion of this product was coming from the Middle East. So this is a huge problem for Chinese petrochemical industry. Also because the Middle East is an important exporter of LPG, which is a competing feedstock for with naphtha and also that there are going to be deficits also of LPG.

So -- and here, we show on this graph is the increase in the number of LR2s, which are trading dirty, which -- and this increase, which was ongoing throughout '24 and the beginning of '25, but accelerated around August, September '25 and the decline in the number of LR2s trading clean. So despite the growth in the LR2 fleet of around 50 vessels in 2025, there was a decline of 11 vessels in the number of LR2 vessels trading clean. And of course, here you see the crude tanker freight rates, which are surging. They have been improving at very profitable levels already at the end of last year, but then the most recent developments in Iran led to this huge spike of these rates to record levels.

Another important fundamental, which has been supporting the market has been the opening of refineries, as we mentioned several times in China, the Middle East and more recently in Africa and Nigeria and the closures in Europe and in the Americas, in particular, but also Oceania. The Americas, we have recently seen some important announcements of closures of refineries on the West Coast, and there we expect to see more imports into that region from Asia in the future, and that should also be very positive for ton-miles. The fleet is continuous aging rapidly. Important to note that after the order book rising to almost 16% at the end of 2024, more muted ordering last year led to a decrease in the order book as a percentage. This is only for MRs and LR1s the percentage of the fleet to 13.5%. During the meantime, the fleet has been aging. So the percentage of the fleet, which is more than 20 years rose from 16.2% to 20.3%. So there's this delta here, which rose quite sharply between these 2 lines. And this is, I think, quite positive for the market going forward as long as we don't see another surge in ordering this year.

The vessels are aging rapidly they are reaching -- crossing this 20-year threshold, but soon they will also be reaching 25 years of age. We see here from 2028, there's a rapid acceleration in the number of vessels and this is measured in terms of deadweight tons that are reaching that 25-year mark. So a lot of scope for demolition, which is something which we were actually already seeing in '25. So starting from very low levels, we almost had no vessels demolished in '23 and '24. We started seeing an uptick in demolitions throughout last year with 17 tankers demolished in Q4 '25. So still much less than the 39 tankers demolished in 2021, but -- and this was happening despite the strengthening market and very profitable markets that we saw last year. So it confirms that we should be seeing an increasing higher level of demolition going forward even in a strong market environment.

Here, again, we show in '25, only 77 vessels ordered. So it's not such a low number if we look at the historical figures, but also must be noted that the fleet has been growing. So 77 vessels ordered last year is very different from a similar number of vessels ordered, for example, in 2010 or 2011. So -- and then here, we show the fleet growth, which for the MRs and LR1s is around 3.6% across all tankers, 3.3% for this year. This would have been a number which other things being equal should have led to a softening of the market. Of course, the geopolitical developments that we have seen recently have a much bigger impact than this fleet growth here. And it should also be noted that if we look at the fleet growth in the sub-20 fleets, so the vessels which are less than 20 years across all tankers, it is less than 1% in '26. So this is also very supportive of freight markets this year.

Here in terms of NAV, okay, this NAV here is a bit dated. Vessel values, as we saw in the previous slides have been moving up together with freight rates and TC rates. So we calculated an approximate NAV as of the end of February. And if you use today's exchange rate, it would equate to around EUR 8.6 per share. So we are still trading at quite a big discount to NAV despite the strong share price performance last year and the beginning of this year. CapEx commitments, I think we already covered that. In terms of shareholder returns, we were able to confirm this improving trend here. We saw that our payout ratio increased from 16% to 13% and then to 40% out of '24 results. We were expecting this year, and that's what we communicated to the market that -- the Board was going to propose a similar payout ratio also for this year of 40%. But instead, they were -- because of the very strong deleveraging where we ended the year at only 2.4% ratio of net financial position to free market value, they were able to propose a more generous distribution dividend of $32 million -- around $32 million and which together with the interim dividend distributed in November, equates to a 55% payout ratio out of the 2025 results. Of course, the dividend is still to be approved by the AGM in April. I think that's it. So I'll pass it over to the Q&A.

[Operator Instructions] The first question is from Matteo Bonizzoni of Kepler Cheuvreux.

I have 2 questions. The first one relates to the potential -- the impact of the potential continuation of the current situation in Middle East, Iran. So first of all, I was looking at Clarksons that the week of the 6th of March, the MR spot rate, which they say is 590 -- can you comment on that also in relation to what you have seen in the market? And then more maybe interesting, you are mentioning in your slides, I mean, there was a spike, but then there is also the impact of the demand destruction. I mean -- so all in all, in a situation in which this should last weeks or months, do you expect a net positive or net negative impact on the rates for product tankers? The second question is supply fear. Supply fear 1 year ago didn't prove correct. And also Clarksons was pretty bearish, I think, on the fact that 2025 could have been already sort of engusted by this higher ship new building and so on. It didn't prove absolutely correct. But now also in your press release, you're mentioning a little bit of risk probably starting from 2026, you are mentioning the 6% fleet growth, which is the projection of Clarksons. But in your slide for your MR and LR1, you say 3.6% net. So all in all, your view is that finally, 2026 could be or not the year in which we could have some softening of the rates related to that higher capacity in the market.

Okay. Thank you for the questions. So starting with the Iran war, as I think I mentioned, it is very difficult to read the situation because -- we know how erratic these announcements from the White House are. There is, of course, a very strong incentive for the U.S. to end this war as soon as possible because it is detrimental to the world economy, but also to their economy despite being an important oil producer. And it can lead to higher inflation, and we know how unpopular that is in the U.S. and higher petrol prices at the pump, and we know how popular that is in the U.S. and there are midterm elections arriving soon. So there is a very, very strong incentive for this war not to last very long. And then, of course, there are also pressures maybe for a solution to be found, which would entail a change of regime, but that seems very difficult, at least to me. But maybe I'm mistaken. I don't know what's happening behind the scenes. But -- so if that objective is abandoned, I think that then maybe a more realistic approach can be taken, which would then mean that this war will actually not last that long because I think that even as Trump mentioned recently, there's probably not much more left for them to bombed. They have already bombed so much in Iran. So -- and the stakes from an economical perspective are huge, right? Because it's not only the oil for which that passage way is very important. It's also LNG, it's also LPG. It's also other urea, also some raw materials which are needed for the production of chips. So and vice versa, they also have to import food into that area, and they have -- so it will also be very, very complicated for them to continue this war for very long also from that perspective. And of course, there are also all the Gulf countries which are already suffering hugely because of this war, which have developed economic systems, which rely on tourism and wealthy people wanting to live in those countries and these latest developments is putting into question their economic model.

So if this war doesn't last too long, the net effect is definitely positive for the market because the fixtures, there are some fixtures that we have already closed, some others that we are negotiating, we might be closing soon, which are really at levels we haven't seen before. We didn't see this not even in '24 -- in the first half of '24. So they are really very, very strong levels. And of course, there is a weakening happening in the East of Suez because of the lack of cargoes there. But as of today, it's much more than compensated by the very strong markets that we are seeing west of Suez. So that's in relation to the Iran war. Is the average $59,000? I don't know. I mean it's a bit too early to calculate averages. I mean, these averages because it takes time to fix vessels, right? So vessels are not immediately open, then so it is difficult to assess this. I mean you need a few months to really understand what has been the impact on the averages for the spot market. This is just one figure at a point in time, which takes averages of all routes, but it's not reflective today still of the averages we are achieving on our vessels. But if the market continues like that, it could be reflective of the averages we will be achieving of our vessels over a course of several weeks maybe. I hope I answered your question. Was there something else I missed?

On the supply Supply growth, yes. The supply growth, as I mentioned, 3.6% can look like quite a big number if we look at MRs and LR1s and 3.3% across all tankers. But in reality, it's not that big an increase because the sub-20 fleet growth is of less than 1% and vessels which are more than 20 years old tend to be employed in marginal trades. And we are seeing -- we have seen a tightening in the supply/demand because of also the increasing number of vessels that are sanctioned and also a tougher application of this enforcement of these sanctions. -- with vessels being boarded. And so the sanctioned vessels, which continue to operate previously in quite a productive way are increasingly less productive, and that is also tightening the supply-demand balance. So irrespective of the war in Iran, which might last only a few more days, hopefully, the fundamentals that we were benefiting from are strong and should continue to support the market going forward. We were seeing an improvement in rates throughout last year. So Q2 was stronger than Q1, Q3 was stronger than Q2, and Q4 was stronger than Q3. And Q1 this year is stronger than Q4 last year. So -- and not only because of the -- even before the war in Iran, our averages for Q1 was stronger than Q4 last year. So there is this improving trend, which is linked to the growing number of vessels sanctioned to the lifting of sanctions in Venezuela to the increase in oil supply that we were seeing to quite healthy demand growth to the dislocation of refineries, all the factors that we mentioned usually in our presentation. So this other factor has led to these ridiculous freight rates, which, of course, are not sustainable longer term. They will not -- they might last another few weeks. But in the meantime, we are benefiting from this, too.

The next question is from Ariana Terazzi of Intesa Sanpaolo.

I would have 2 questions. In the recent past, you have maintained roughly a 50-50 balance between spot exposure and time charter coverage. You reached 54% for '26 just before the Iran war broke out. And now given the recent spike in spot rates together with volatility related to the geopolitical environment, I would ask you what is your updated strategy on contract coverage? And within this scenario, if you could add more color on how is interest from charters in securing vessels on longer-term contracts moving. And my second question is on the cost side. Could you help us in forecasting the main cost lines, particularly regarding your current expectations for operating costs and G&A as we saw that some cost lines have moved linked to the Iran war.

Thank you, Ariana. So I'll take the question on the coverage and the cost question I'll let it for Federico. So on the coverage front, we are quite happy where we are today in terms of contract coverage. So we are as an average for the year at 54%. So that is a good level, which is more or less really where we wanted to be. And -- but this declines gradually throughout the year. So as we approach Q3, we will be looking potentially for some more contracts to cover Q4, but not so much Q4, but '27. I mean our priority is now really to increase coverage for '27, where we are still only at 22%. But we are happy where we are now in terms of coverage. There's still a lot of interest potentially at quite high levels today, but not as high, of course, as the levels at which we can fix our vessels on the spot market today. So Yes. So that is the answer for the coverage question. I hope I pass it over to Federico.

Thank you, Carlos. On the OpEx front, as we speak, we don't expect higher cost relative to what we achieved in 2025. We think they should be what we can see right now more or less at the same levels, apart from maybe some small inflation effect. What I was saying before is that especially in the last part of the year, in the second half of the year, we had -- we saw higher logistic costs, which, as I mentioned before, were really related to the specific trading areas where these vessels were. And of course, we need -- as you can appreciate, we need to provide spare parts to these vessels that trade around the world, and you might happen in a situation in which maybe your vessels are in some parts of South America or India, where maybe it is particularly expensive to sell spare parts to and then you end up in this kind of situation, which are also a little bit hard to predict in advance or much in advance. So on the OpEx side, I wouldn't expect a significant increase relative to where we were in the full year '25. On the G&A side, also I would expect the cost to be pretty stable going into 2026. Then, of course, it's a bit early. As I mentioned before, a significant part of the cost of that -- of the variance compared to the previous years is also related to the variable component of the personnel cost. And of course, this variable component obviously rises when the company makes very strong results, but it's also a flexible component cost that obviously goes down, decreases when things change. I don't know if that answers your question.

The next question is from Massimo Bonisoli of Equita.

I have 2 questions. Back on the question on Iran. If Hormuz were to reopen in the coming weeks or months, do you expect trade flows to normalize quickly? Or could the market remain structurally tighter due to slower transit security checks, higher insurance costs or whatever? Would you be willing to bring back your fleet over Hormuz quickly? It seems to me that logistics behind refining is becoming a demurrer with Gulf upstream and downstream assets now stopped and tanker spot rates may stay high for a longer period even with the reopening of Hormuz. The second question is on the release on the -- by the IEA. They decided for 400 million barrels from strategic reserves. How much would be clean products of those 400 million barrels? And what are the implications for clean tanker market? I've been told those products are old and not suitable for current standard on fuels.

So Massimo, thank you for the questions. So I think we will -- well, first, one thing we didn't mention in today's call, but which is important is that we don't have any vessels stuck in the Persian Gulf. So that is already very good news. We had one vessel which was supposed to load the cargo when the war started, but we managed to reach an agreement with the charter and canceled the contract because it was not safe for us to enter. And we don't expect any of our chartered vessels to have any issues relating to having disputes because the charter wants to send the vessel in and we don't agree. I -- for the reasons I mentioned previously, I think there are very good reasons for the U.S., in particular, to try and solve this conflict as soon as possible. I think, yes, the change of regime looks rather complicated and potentially extremely costly economically, but also politically, I think, very difficult to sell domestically inside the U.S. So if the Hormuz reopens, we will assess very carefully the situation, of course, before sending our vessels, we want to make sure that there aren't any mines which could be hitting our vessels. But if we deem it safe, we will transit. Of course, our main concern is the safety of the crews. It's not that of the vessel itself because the vessel itself can be insured in normal circumstances. Right now, I actually understand that it is very difficult to obtain actually insurance to -- because of the escalation in the attacks that there was in the last few days, it's very difficult to obtain insurance to cross the strait. But if we do have a situation where flows come back, but with some sort of friction, that would be very positive for the market, of course, because it mean less efficiency, but it wouldn't mean that the market is undersupplied potentially with the release from the IEA plus the flows coming back. And I believe, unfortunately, they might not be able to come back at full speed immediately. The market, however, could be -- have enough supply, but in a much more inefficient way with a lot of oil still being supplied through the ports in the Red Sea and to avoid transits through the Bab-el-Mandeb Strait, these crude flows would then have to sail to, meaning very strong demand ton-mile-wise for crude tankers. And of course, a lot of crude moving from the Americas, where production has been growing fast and is expected to continue growing this year. It will crucially depend on how severely damaged also all this oil infrastructure is. We are reading headlines every day of new -- of refineries being attacked, of export terminals being attacked. So we really will only be able to assess and understand the extent of the damage, I think, when things come down. But there is -- I expect that when the war ends, unfortunately, we will not be able to see all the flows we were seeing before from this region. But this might not necessarily be too negative for the market if it is compensated with the additional releases from the IEA. And if this creates some friction, some inefficiencies in the system, which are very positive usually for the market. My understanding is that the strategic release, maybe I'm wrong, it's only crude. So this is stock to have stocks -- strategic stocks as refined products is not efficient, and it's also -- once products are refined, their stability is not -- is limited in time. So they are conserved as crude, the stocks. And then so what we will be seeing is crude stock release, which will create immediately more demand for crude vessels, but thereafter also more demand for product tankers.

Very interesting. If I may squeeze in another question, if you would consider selling additional older vessel if asset values would continue to increase going forward?

Yes, yes. I think that is in the cards. If we had more or less in our plans in any case to sell the 2 vessels in our fleet, which are 2012 built. So if we find the right opportunities during the course of this year, we are likely to be selling these vessels.

Gentlemen, there are no more questions registered at this time.

Thank you, Dan. Thank you, everyone, who participated in the call today. And well, we will be seeing each other soon when we approve our Q1 results, and please do reach out to us if you have any other questions in the meantime.

Thank you. Bye-bye.

Ladies and gentlemen, thank you for joining. The conference is now over. You may disconnect your devices. Thank you.

Good afternoon. This is the conference operator. Welcome, and thank you for joining the d'Amico International Shipping Third Quarter and 9 Months 2025 Results Web Call. [Operator Instructions]

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 d'Amico International Shipping Q3 Earnings Presentation.

So moving straight. Okay. Moving -- skipping the executive summary as usual and moving straight to Page 7, snapshot of our fleet. As of the end of September, we had 31 ships, 31 product tankers, of which 6 LR1s entirely owned, all owned after we exercised the purchase option on the Cielo di Houston, which was previously in bareboat chartered-in for $25.6 million at the very end of September.

We had 19 MRs, of which 17 owned and 2 bareboat chartered-in, and we had 6 handy 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 or scheduled bank loan repayments in the first 9 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 scheduled repayments in Q4 this year. And going to '26 and '27, we're expecting to have slightly less than $25 million of scheduled loan 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 4 newbuilding LR1s in 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 deleveraging 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 charter contracts, time chartered-out contracts at slightly less than $23,500 a day. We have already fixed 23% of our days at $28,262 on the spot market. So that means that for Q4, we have 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 a sensitivity. So, should we make $18,000, which seems pretty unlikely on the 3 days that we have for Q4, so the days that are fixed right now, that our total blended daily TCE, so spot plus TCE 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 on 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 a sale of 2 vessels, 2 of the older 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 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 2, which are the High Fidelity and High Discovery, 2 MRs still bareboat chartered-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, is 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 make -- should we breakeven for the day -- in the days that are not fixed right now. So, should we breakeven? For the days -- for the 3 days, we would make a profit of $21.9 million this year, $26 million in 2026 and $4.6 million 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 free days on the spot market for 2025 for the remainder of 2025, then our net result would be of $83.8 million. Should we make $21,000 a day, our net result would be of $85.6 million. If we make $24,000 a day, our total net result for the year would be of $87.5 million. And looking at next year, again, should we make $80,000 on the spot on the free days, our net result would be of $47.7 million. 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 free days, our net result would rise to $91 million. So, strong upside to earnings.

Going to the next page on the cost side. OpEx, we had a daily OpEx of $8,148 in the first 9 months of 2025. We still have some inflationary pressure that we've been talking about in the last quarters, also in the -- also in Q3, also in the first 9 months of the year. However, the trend is staining a little bit. The overall daily figure is not significantly higher than 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 G&A side, we had $19.2 million of total G&As. And here, the variance relative to the previous years, as we mentioned in the past, is really related to the variable component of personnel 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 $1,085.3 million.

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 deleveraging 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 9 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 2 Glenda vessels that we sold. This was booked in Q2 that I just mentioned before.

Excluding some non-recurring items from the first 9 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 9 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 blended daily TCE of $23,583 in the first 9 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 -- 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 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 4 LR1s 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, the leased vessels. We exercised 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 2032 and 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 the 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 TCE and whose options we exercised and their book value as at the end of September. And we see there's still -- the delta is 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 date.

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. TCE rates have been gradually moving up over the last few weeks, reflecting the strong market conditions and the strong outlook for the market for the coming years for the reasons, which we will be discussing, outlining in the rest of this presentation.

At the bottom, we show the increasing percentage of eco vessels that we are controlling as a result of the disposal of the new eco vessels in our fleet and of course, in the previous years also of the deliveries that we had of new eco 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, we 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 1-year TC for an eco MR today is at $23,500. So very profitable rate and for an eco LR1 at $26,500.

So going on to the following slide. 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 both 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 exports of diesel, in particular, 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 Lukoil and Rosneft are still to be felt. And I think we are going to be start seeing them towards the end of November because there is a phase-in period end December. And then we are going to be starting to see a more pronounced decline in exports of refined products from Russia, which is an important exporter of such products. So, lower exports from this country is going to tighten the refined product market and has already contributed to an increase in refining margins, so as we will see later in the presentation.

So 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 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 of having to sail these longer routes, we would have expected ton days to have risen and that authorized. That is what happened in the first 9 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 9 months of '25. There was a pickup in activity over the summer. But nonetheless, the average for the period is well 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 will not -- is not likely to be negative for the market, and it could potentially be also positive. The environment we had in the first 9 months of '24 was exceptional. We had very, very strong refining margins and big arbitrage 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 and incurring these additional costs associated with saving such longer routes.

In a more normalized market, where these arbitrages are not as big than having to sail 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. And here, we show also the effect of cannibalization, which we do not see in the graph in the previous slide. So, not only the ton days overall declined since Q4 '24, 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, VLCCs, but even more so on Suezmaxes.

As we see here on the graph on the right-hand side, the blue bars are the Suezmax volumes transported. And on the left-hand side, on the yellow line here, we see the percentage of volumes transported on uncoated 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 vessels -- dirty vessels to clean up to transport these products. It then declined very sharply this percentage, but then it bounced back and now it's at 7%. So, we continue seeing this cannibalization ongoing. It's more to do now with vessels performing maiden voyages. So, newbuilds delivered that transport CPP on their maiden voyages rather than cleanups, but there is also some cleanups which have happened this year.

Going forward, it is -- this cannibalization is, we believe, is going to be driven mostly by new builds, transporting CPP on their maiden voyages because of the acceleration in deliveries of newbuilds that is expected, planned, let's say, for the rest of this year and the coming 2 years. Here, we see that the refining margins have increased quite sharply, especially here, we see crack 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 attractive -- 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 sanctioned oil and water. This is a very pronounced increase on sanctioned oil and water, which has been ongoing, but which gained new impetus this year and in particular, also over 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 ton 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 deadweight ton basis. So it's a very high percentage of the fleet. And 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 crude 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. So let's say, this increase in oil and water is linked to a more inefficient 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 to which the oil is sold and then it's retransported to its final destination where it is consumed. So the more use also of, 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. interest. And then a few weeks later, the 2 countries managed to reach an agreement to postpone the implementation of these fees by 1 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 per the last, let's say, version of these fees, those imposed by the U.S., a large number of bigger tankers would 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 throughputs. 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 U.S. West Coast. So, we are seeing declines in refining throughputs in these regions, 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 the 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 and 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, a very pronounced increase in production quotas from OPEC this year, which coupled with the non-OPEC supply, which came to market is -- 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.

So, China has been building up its oil stocks, strategic oil stocks, so compensating for what otherwise would have been an oversupplied market. And going forward, it is likely that the 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 will be transported on non-sanctioned vessels. So, increasing the demand and the freight rates for the compliant fleet.

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 sanctioned 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 not seeing the 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, naphtha was expected to be an important contributor together with jet fuel. Jet fuel maintained, let's say, its promises and it was the second biggest contributor, but naphtha disappointed to a large extent. And that has to do with the -- possibly the positive -- more favorable arbitrages available for purchases of LPG, which competes with naphtha as a petrochemical feedstock. And 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 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 naphtha demand, Chinese imports of naphtha 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 U.S. LPG. U.S. is one of the biggest exporters of LPG. And given these tariffs imposed by China on this product from the U.S. it became more attractive for them to import naphtha.

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 market is 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 2 markets. And that is happening now. So, this thesis is playing out in this moment, and we are seeing this very big spike in freight rates now for the crude tankers, in particular, VLCCs are doing very well right now, trading at above $100,000 per day, but also Suezmaxes and Aframaxes are doing very, very well. And not surprisingly, we have seen that the percentage here of LR2s, which are trading clean has fallen since July '24 from 63% to 57%. So, there's been a steady decline in the percentage.

And this has happened despite the 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 clean to this 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, I would expect this percentage to continue falling and therefore, to indirectly continue tightening 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 U.S., particularly in the U.S. 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 imports from Asia, so contributing very positively to ton miles.

Here, we see Africa has been an important contributor in '24. Now, there is talks of Dangote, which opened the 650,000 barrels 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 2 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. 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 had 19.5% of the MR and LR1 fleet now, which is more than 20 years of age. So, this gap between these 2 lines bodes well for the market -- for the future market despite the acceleration in vessel 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 MR and LR1 fleet, 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 picking 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 Q3 '25 and into next year. But if we look at the -- yes, here, we see only 37 vessels ordered this year. So, very low number if you analyze this. This is in the first 9 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 around 3%.

And given what we discussed with the increasing vessels being sanctioned, the decreasing 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 fleet 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. We are still at 40%. Okay, this is at the end of September. Thus, the share price has traded up slightly since then, but we are still trading at a big discount to NAV. Here, on the CapEx commitments, I think we already covered this on the previous slide, the use of funds. And yes, just quickly to mention, we didn't talk about the dividends. The Board approved an interim 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, yes, we continue working to make our fleet as efficient as possible through energy-saving devices and operational measures. But I think these are the most important slides that we wanted to cover.

So, I pass it over to the Q&A. Thank you.

[Operator Instructions] The first question is from Gian Marco Gadini of Kepler Cheuvreux.

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 it's something that we can also expect going forward?

Yes. Thank you, Gian Marco. Thanks for the question. No, I believe it reflects -- I mean, I think we don't have such a big fleet today on the spot market. So, we are slightly more than 50% covered through period contracts now. 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. 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, I must say.

So, this result is a reflection of a strong market, which 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 -- 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 are 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 rate -- the levels are very strong for the last 2 months of this year. So, there is this expectation that we will end the year on a high note because of the very strong -- 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 will be going to have also a lot of refined product at sea.

The next question is from Massimo Bonisoli of Equita.

Carlos and Federico, I have 2 questions. One regarding the recent buildup 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, let's say, on the TC rates, how would you describe the current condition in the time charter market? Are clients still showing reluctance to commit to medium-term contracts? Or are you seeing sign of increased appetite to lock in rates?

Yes. Massimo, thanks. Good questions. On the floating storage, let's go back to the slide here, which maybe helps us. But this is the sanctioned oil and water, right, where we see this very big pronounced increase here of around over the last few months, 100 million barrels per day -- 100 million barrels, sorry. And that is the 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 be still have risen very much is the floating storage. So, this is oil at sea and 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 at shore. It will take longer than usual because of the sanctions, because of this need of triangulations. So it will create a more inefficient market. So unless 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 VLCCs reaching $200,000 per day. So it's not inconceivable. We saw VLCCs a few weeks ago, they were at $120,000 per day. So it could happen, and it will drive up all the market, right, not only the VLCCs for the reasons we mentioned because of the transmission mechanism, 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 and 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 you said 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 non-OPEC and OPEC oil supply.

The OPEC supply growth now apparently is going to slow down because they are going to -- after this increase in December, they seem to want to pause further increases for a few months. But there's still a lot of non-OPEC growth planned for '26 and apparently much more than the demand growth. So, that in itself could create a very oversupplied market and a forward 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. But yes -- 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 take advantage of that to gradually increase our contract coverage, which is already now at a higher rate than -- 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.

[Operator Instructions] Gentlemen, there are no more questions registered at this time. I'll turn the call back to you.

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

Thank you. Goodbye.

Ladies and gentlemen, thank you for joining. The conference is now over. You may disconnect your devices. Thank you.