Brian Lee - Chief Financial Officer Emanuele Lauro - Chief Executive Officer Robert Bugbee - President Cameron Mackey - Chief Operating Officer.

Gregory Lewis - Credit Suisse Jonathan Chappell - Evercore Partners Douglas Mavrinac - Jefferies Magnus Fyhr - Seaport Global Securities LLC Spiro Dounis - UBS Securities Fotis Giannakoulis - Morgan Stanley Ken Hoexter - Bank of America Merrill Lynch Herman Hildan - Clarkson Platou Securities AS.

Hello, and welcome to the Scorpio Tankers Inc. Third Quarter 2017 Conference Call. I would now like to turn the call over to Brian Lee, Chief Financial Officer. Please go ahead, sir..

Thank you for joining us today. On the call with me are Emanuele Lauro, our Chief Executive Officer; Robert Bugbee, President; Cameron Mackey, Chief Operating Officer. The information discussed on this call is based on information as of today November 16, 2017 and may contain forward-looking statements that involve risks and uncertainty.

Actual results may differ materially from those set forth in such statements. For a discussion of these risks and uncertainties, you should review the forward-looking statement disclosure in our earnings press release that we issued today, as well as Scorpio Tankers’ SEC filings, which are available at scorpiotankers.com and sec.gov.

Call participants are advised that the audio of this conference is being broadcast live on the Internet and is also being recorded for playback purposes. An archive of the webcast will be made available on the Investors Relations page of our website for approximately 14 days.

Before I begin this, if anybody has any modeling questions not to get tied down on the call, just contact me later and we’ll discuss offline. Now, I’d like to introduce Emanuele Lauro..

Thanks, Brian. Good morning or afternoon to everybody. So despite the market fundamentals pointing in the right direction, the rate environment has remained rather unsatisfactory during the third quarter, and this should not be much of a surprise as we had guided on the rates pretty late in the quarter.

A very similar rate environment is persisting during the fourth quarter as per the guidance released today in our press release. Predictions are difficult to make and we must admit we would have expected to be in the stronger market by now. However, rates in the past week or so has started to give positive signs.

Global product inventories continue to fall. MR ton miles demand growth is estimated to be around 5%, due to a stronger than expected oil consumption growth. Net fleet growth was below 2% in 2017 or is expected to close at just below 2% in 2017, and is anticipated to be actually around 1% in 2018.

In addition to this, in 2018, more than 50 MRs will turn 15 years old, and will be forced to stop trading into a so-called second-tier market. In 2019, nearly 90 MRs will turn 15 years old, and these are numbers that are further improving the fleet growth dynamics for modern tonnage.

So with demand growth actually overtaking supply growth, we remain positive on the medium and long-term outlook for Product Tankers. We believe the conditions for return to a stronger charter rate environment could be around the corner and show themselves starting from the upcoming winter. And with this, I’d like to turn the call to Robert..

Yes, I haven’t really got anything further to add. I think that it’s very encouraging.

The – as Emanuele says, as we come into the end of this year and the inventory discipline is there, we’re also seeing from the customer’s side in these last two weeks, the customers reengage and taking a number of ships on one-year charters across the market, and it looks very encouraging for the future.

But as Emanuele said, it’s still pretty difficult to work out that exact inflection point. I think, we’re happy to go to questions now..

Thank you. [Operator Instructions] Our first question comes from Gregory Lewis with Credit Suisse. You may begin. Gregory Lewis, your line is open. Please check your mute button..

Yes. Thank you and good morning, and thank you for that, operator. Robert, could you talk a little bit about – clearly, rates have seemed to disappoint. But you did mention that that customers are starting to – it sounds like reengage a little bit.

As we think about that as – are those customers primarily traders? And what I’m trying to get at is, is part of the weakness in product rates that we’re experiencing right now, is it a lack of arbitrage opportunities across the globe?.

No, I think things are changing. I mean, I think the weakness we’ve had up until the last couple of weeks really has been a lot do with what happened with the hurricanes and all the changes there combined with the weakest point to the year on a seasonal basis. And now you’re getting the exports coming back up out of the U.S.

Gulf, and those are really very strong exports now in the U.S. Gulf, which is reignited the U.S. Gulf MR market. You could argue on a factual basis, as we sit today, the triangulated rates are higher than where they were at this time last year. But it’s holding back to the whole market is in products.

it’s just simply that destocking of the – destocking you’ve had from the inventory side of life as a result of the OPEC position, that is coming to an end. As Emanuele said, you’re normalizing positions.

The people you’ve taken in time charters across the scope of your customer range, they’re oil companies, they’re trade oil companies and they’re pure traders on speculation who would be anticipating the arbitrage opportunities to come as you’ve got a generally, the other thing that’s constructive is, you’ve got a generally more constructive energy tape..

Okay, great. And then just as you mentioned the – an increase in exports from the U.S. Gulf and just as we think about shale oil, it looks like that’s a trend that’s going to probably have some legs here over the next, I don’t know, call it, 12, 24 and 36, months. The end markets for the U.S.

exported products, is that changing, or any sort of color you could provide us around where the bulk of those volumes are going?.

Well, the predominant growth there is Latin America for that very, very strong exports and export growth into Latin America. You could also expect over time that you’re going to see, for example, you’ll see cargos also drift towards Asia as well, which will be very beneficial.

But the predominant amount is diesel, 60% of those exports go to Latin America. The rest of it is Europe, West Africa and Asia..

Okay.

And then just on the Latin American trade, is that primarily an MR trade, Handy, or is it pretty much a mix of both?.

Predominantly MRs..

Okay, perfect. Thank you for the time, gentlemen..

No problem..

Thank you. Our next question comes from Jon Chappell with Evercore. You may begin..

Thank you. So I agree with Emanuele’s assessment on kind of where things are looking right now. But I think, maybe 12 months ago, we all thought kind of the same thing.

So can you just kind of refresh our memories kind of what happened this year that was surprising to the downside? I know, we’ve talked about the inventories ad nauseam anything else besides that? And if we’re sitting here six to nine months from today and things haven’t got much better despite the fact that inventories are so much normalized, your order book is down to 20-year lows.

Where could it possibly go wrong? What are we missing on the downside?.

Let’s take this – this time last year, we were just at the start of that the OPEC cuts, et cetera, et cetera. And I think probably what would surprise anybody is actually they’ve been pretty disciplined.

It’s actually for the first time – this time last year, I would not have expected on previous history that they could have kept their act together and they could have disciplined and kept those cuts going.

The – so that I think is, let’s say, the predominant surprise, because the headline growth in product demand or the world economy is actually surprised to the upside.

We’re seeing that in the container business to dry business is much, much better than anyone would have expected this time last year, as is the headline growth in demand for petroleum products and vegetable fuels.

If we’re looking out this time nine months now, we’ve got a very strong undercurrent in demand right now headline, the dry fleet, dry cargo markets indicating, the container markets, the gas markets, everything in shipping is showing you that the world is growing hard.

So on the basis that the supply is really fixed for not just the nine months, but the next sort of two years also, I guess, what could go wrong would be some geopolitical event that cripples headline demand..

Okay. That’s certainly impossible to try to predict. The other thing I want to ask about is, I’ve looked back at seasonality for the last 15 years or so, the requests of some investors. And obviously, every single year is different.

Sometimes there’s really no “seasonality.” But if we kind of took the average of the last 15 years or so, we really start to see an uptick in the MR rates around second or third week of November and it’s been something we’ve been saying for a couple of months now, and here we’re – it’s happening in the second week of November essentially.

Do you think this is the kind of the beginning now to transition to…?.

I would – yes. I would argue that in a normal year, it happens plus one week – plus or minus one week at Thanksgiving in most of the difficult dispersion. I think what different is, in this year, is yes, of course, right now this week you’re seeing those numbers, those improvements really show up.

But I tell you what’s encouraging is that this has been going on since, I don’t know, we had this pickup since beginning – right at the beginning of October two, three weeks ago, they dragged themselves all the way from very low numbers now to something. So that’s good.

That is something that you would take as a confirmatory data points now for optimism that the market is now acting, I guess, as you – we would expect it in terms of the season..

Yes, great. Last one, I don’t know if this is for Brian or maybe even Cam. You beat our estimates every single asset class, LR2s down to Handys, but the revenue is a little light. I’m just wondering, was there some repositioning of Navig8 ships as they were released from the Navig8 pools and tiers that maybe resulted in some offhire time.

And if so, has that carried into the fourth quarter at all we should be addressing?.

Hey, Jonathan, this is Brian. Yes, there was some repositioning of those vessels, so – and that did drag over into the fourth quarter for about four or five vessels. So, yes..

Okay.

But four or five vessels a couple of weeks is not pretty meaningful, or is it more than that?.

It’s four or five vessels, it’s going to take sometime, right? So – but overall, the way – the integration has gone, it’s gone very well. So we’re very happy with what the results were..

Okay. Thanks, Brian. Thank, Rob..

Thank you. Our next question comes from Doug Mavrinac with Jefferies. You may begin..

Great. Thank you, operator. Good morning, guys. I just have a few follow-ups for you guys as well. First, Robert, as we’re kind of peeling back that onion and John mentioned some of the seasonality that you normally see at this time of the year in terms of maybe a reason why you’ve seen an improvement in your activity and earnings.

And then also, if you kind of look at the WTI-Brent spread going back to really late August, but it became more pronounced in the September in support of declining margins.

So if you peel kind of each of those things back, when you look at the chartering activity, so we see charter rates and people view that as a – an indication of kind of how tight the market is. But I view that as kind of a scoreboard, I mean, things could be happening underneath.

So when you look at chartering activity maybe outside of the U.S., especially given some of your increased LR exposure.

Do you see any signs of changes in chartering activity over the last few weeks – last couple of months that would suggest that it’s more than just seasonality that it’s more than just a bump in the refining margins that you are seeing tightness across that refined products inventory spectrum?.

Yes. I think your biggest clue to that is actually in our guidance so far quarter-to-date, because the area that is performing the best is your big LR2s. So your big LR2s is nothing to do with arbitrage, nothing to do with weather.

And then the one that is fair, the LR2s have gone through that period in those 16, 16.5 levels is a fundamental sign that your fundamental demand, as you’re talking about underneath the – that we can’t view is very healthy..

So that’s kind of what happened..

If you look at it on a year-on-year basis, I mean, the – this time a year ago, the LR2 market, I think, was – I don’t think it was just about in double figures. I mean, the clocks and index has it at 6,400. But obviously, we always – we beat that one. But I mean, it was substantially lower than where it is today..

All right. And isn’t that Robert, kind of what happened back in 2013 and 2014, where in 2013, you started seeing U.S. exports picking up because of shale oil, MR rates were going into mid-teens, but the LRs were lagging..

Sure..

But then in 2014, LRs started taking over then that [Multiple speakers].

Yes. But I mean, if we look at the LR2s, it’s in fact, I mean, what’s happening in it. Middle East exports to the UK and the Far East have been really strong. These are – this is not arbitrage. This is just the top line curve showing, even backhaul UK count to the Middle East have been strong..

All right. Fair enough..

So far cross fingers, and we just don’t want to jinx anything ourselves. As Brian said, we’re really pleased with the integration of the Navig8 deal, and we are – really like the ways that this LR2 market is set up and and structured..

Okay..

And, yes, we’re disappointed, generally, as with Jon Chappell, about the year. But to have that opportunity to grab that fleet and be the key player in those big ships is very exciting going forward..

Gotcha, very helpful. And then, Robert, as a follow-up to that, and thinking about the LR2s and LR1s and given their longer haul nature. But within the context clear to strengthening bunker fuel prices are rising. In that type of environment, so not just what’s happening specifically in products, but the broader crude market.

You guys have some eco ships.

And when you think about kind of eco premium that you guys receive relative to the market, is that an environment where you could see that really start to show the fruits of the labor over the last few months with the acquisition, but also kind of the way you guys have been positioned?.

Sure. But it’s a bit more than that too. I mean, if we look – if we start looking at the thing itself, you talk about the labor, is that come February, we have no more CapEx in terms of growth going out. We have very little CapEx in turn because of the newness of our fleet and maintenance going out.

We have – we are very prepared for the – with the new eco fleet in terms of the regulations, which are going to lower our capital costs compared to competitive going forward. And then, yes, the fact that you consume much less fuel is really good if you have a rising fuel environment against your competition and that’s fantastic. But we’ve already….

Thanks..

Yes..

I said, thanks..

Yes, I always say we are quietly looking forward to the future as we see it..

Gotcha, very helpful. And then just third and final question for me.

You mentioned it, Brian mentioned it, the integration of the Navig8 fleet just anecdotally any positive or negative surprises you guys have encountered as that fleet has become Scorpio’s?.

No negative surprises. One positive surprise, I’d say is that, repositioning the vessels and actually getting some of the Aframaxes cleaned up. We got very fortunate with some condensate cargoes, and therefore have been able to put those in the LR2 trade sooner than perhaps we expected. So that’s a nice positive surprise, if there’s one..

Okay, perfect. That’s very helpful, and thank you guys for the time..

Thank you..

Thank you. Our next question comes from Magnus Fyhr with Seaport Global. You may begin..

Yes, thank you. Good morning, guys. Just one question. On the chartered-in fleet, kind of get your thoughts there. I mean you have a pretty extensive fleet already, but we continue to see it taking in more ships here at rates that are below current spot.

Can you kind of just review your thinking there? Obviously, you must be pretty bullish on the market going forward.

But do you need more operating leverage, or how do you think about it?.

Well, I’m not sure that the rates are below the current spot. They may be below the guidance for the trailing fixtures that have been done. But I think, you should be – I think, it’s fair to say that the current spot market saw stronger than the guidance we’ve given for the fourth quarter, and therefore, the charter-ins are hopefully well timed.

I mean, it’s no secret that we – whether we’re bullish on the market, we would not have endeavored to go to the efforts of acquiring that Navig8 fleet and without being bullish..

So I mean going forward, yes..

I’m sorry..

Going forward, you – yes, go ahead..

We’re just adding to Robert’s that, it’s not that we went out and chartered a bunch of fleet – a bunch of ships. We just may be extended or renewed the existing ones rather than adding, just a comment to this..

All right.

So you’re pretty comfortable with the current mix, or would your chartered-in be more on an opportunistic basis going forward?.

I don’t think we will – I think we’re pretty happy with where we are, especially now that Navig8 fleet is there.

I don’t see it as really adding much to the chartered fleet, in fact, on the margin, I would see the chartered fleet going downwards, because as the market improves, we’re not going to – we take – we often renegotiated options with people in a weak market.

But as the market improves, those ships that are coming off charter, we don’t – the risk reward changes. We don’t want to step up into a rising market. It’s one thing taking a ship in a 14, 14.5. But then when the market moves to 18, 19 and the person want 17 to renew, your risk reward changes. So it’s fine with the fleet we have you just let that go..

All right. Thank you..

Thank you. Our next question comes from Spiro Dounis with UBS Securities. You may begin..

Hey, good morning, good afternoon, thanks for taking the question. Just wanted to maybe your views on China’s potential impact next year for the product tanker fleet. They recently lifted the crude import quotas by about 55% for next year, which is obviously a positive for the crude fleet.

But I’m just trying get your sense of, if you think a lot of that crude, hopefully, gets refined and put on the product tanker, and if so, is that better for a long haul trade, or do you think there could be a big benefit for the MRs locally?.

I think that China is only at the moment ever a positive for that product market. I mean, China is like still almost not existing as a trade. So what’s great with China is that, as they develop their own refineries, you are going to see more into regional trade for products.

So regardless of where they – and it’s great if they take in more crude to refine and you’re going to have more into regional trade, you’re going to export, you’re going to release cargo from Singapore to trade to the UK.

It’s – there hasn’t been a time in history, where you’ve created a – you’ve improved the refining capacity of a geographic area that hasn’t stimulated product tanker ton miles demand. And because China is a non-factor in the product market up until very recently, it’s really all positive whatever happens there..

Encouraging. Second one maybe for Brian. Just now you sort of stand back and you look at the integrated or combined balance sheet of the two companies.

I guess, what are the next steps as you see it, if any just from a leverage position or liquidity position, are you basically at where you want to be, given that you see this improvements in rates, or do you feel like you’ve got some more to do there?.

Happy where we are, but we do see the improvement in rates and that’s only going to strengthen the balance sheet going forward. So I think everything is looking pretty good right now..

Yes, last one for me. Just curious about any comments around vessel values here? Directionally, how do you think that plays out? You obviously opted for sale-leasebacks recently to raise liquidity.

But if, I don’t know, if vessel sales ever come back on the horizon here, would you expect some upside here and is that even on the table?.

Well, I don’t think we want to sell anything. I mean, it’s a – I think that your ship values in products are theoretical academic at best.

I mean, if you – there is such a desire out there for the modern ships with not actually in many hands, and as soon as you get any right movement that crosses as soon as you get LR2s up in whatever 19, 20, you get MRs just for a month – with the rates where they are now. You’re going to have values move upwards.

I mean, just up because the great thing in a product market and it includes our competitors too is that, yes, it’s being disappointing. Of courses, it’s being disappointing, being very disappointing on a return aspect.

But it’s not like the product tanker market has traded for any significant period below large big numbers below operating cash break-even. It’s never crossed operating cash break-evens to the downside. Most companies, it’s been hanging around total operating cash break-even..

Yes, got it. That makes sense..

I don’t see any of our competitors now as forced sellers. Navig8 was the weakest on the block and that was partly because of their ownership structure.

Okay?.

Got it. Yes. definitely. I appreciate the color..

Thank you. Our next question comes from Fotis Giannakoulis with Morgan Stanley. You may begin..

Yes. Hello, guys. I want to ask you about how do you see your capital structure going forward. You have a positive and I think that all of us have a positive outlook for the next couple of years.

What kind of a loan-to-value or leverage ratios you have? And how do you view utilizing a free cash flow when this comes with a market improvement between acquiring additional vessels, paying back dividends or buying back some of these sale and leasebacks?.

I think the first is, well, your sale and leasebacks are pretty low interest rate cost. Certainly, that’s not your highest cost of capital at the moment. In the long-term, it’s fixed. So that – your sale leaseback have been pretty efficient in terms of that.

I think the first step would be simply to pay down debt, I mean, to strengthen the balance sheet. I don’t think that you – there’s no anxiety to go get more ships. But it’s a – you have a company that’s massively leveraged to – massive leverage, operating leverage to the upside.

And you’ve had a company that is – you’ve been waiting for the market improvements. So I think the first thing you do is, you have a quarter or two or whatever of just taking improving your balance sheet that way and then you take it from there. I think, when it’s improved, we’re not going to see this improve for a year.

We’re going to see this improve for multi-years, because you’ve got the regulations to follow. You’ve got the dynamic in the other markets, I mean, in total shipping, I can’t remember a time when the newbuilding order books since the 1985, they’ve been in such good shape from the ship owners point of view across many sectors of shipping.

So to the degree this turns, I think, you can easily sit there, pay down debt for a quarter or two and then take life from there, and then really see how you are going to return money to shareholders..

Thank you, Robert. Shall I assume that when you’re talking about paying down the debt and the reason why you are accumulating cash right now is with an eye on the convert in 2019.

How do you think about buying back or financing this convert?.

At the moment, it’s to finance. But yes, as you get cash, you have all different options. It’s cheap in the sense that it’s – the coupon is fairly cheap. It’s not that – buying it back at the moment, yes, maybe not, it depends what prices are available..

Structure over..

Thank you..

One last question about the market and obviously the supply fundamental for product tankers are very favorable order book at a record low level. So and we do not see a lot of ship owners looking to place new orders. This is a striking difference compared to the crude tanker market.

Can you explain why, while we have seen VLCC order, we do not see more product tanker orders. And how different these two segments are? There are some investors….

I think, firstly, we could see differences, anyway the demand structure is a very different on products and crude. I mean, the demand side of the products or all the things we’ve talked about before are looking very good. The environment restrictions are higher with the fleet ages – the fleet ages than they’re in products.

But you’ve actually got more disciplined owners in the product side. I mean, the – if we look back the owners themselves, none of them are – they have different structures. Some of them are like ourselves and ourselves are more – some of them being the PE-sponsored or the quasi public/private ownership companies like the TORMs.

But all of the shareholder on Boards are being pretty focused on maintaining discipline and looking at consolidation opportunities. I mean we’ve clearly done well with Navig8.

But behind the scenes, without going into details, we’re not in – we’re sort of directly involved, but we know of other similar types of consolidation talks that are going on with other product owners that would result in rationalization without adding to the fleet supply, whereas in the crude oil, I don’t understand it, they’ve just kind of – each one of – that they’re being every kind of consolidation talk has broken down in one form or another and each party just decided to go out and order new ships, they’re just different markets..

Thank you very much, Rob. That’s very helpful..

Thank you..

Thank you. Our next question comes from Ken Hoexter with Merrill Lynch. You may begin..

Great. Good morning. Robert, maybe just a moment on your thoughts on the market.

What drove the LR2 rates down so much or further over the past two quarters versus the uptake instability in the LR1s and MRs?.

I don’t think we saw any stability in the LR1s or the MRs. I think that these two, the – I’m not pretty sure I understand the question..

Well, if I look at LR2 rates on an average daily base or your TCE rates, right, you’ve gone from 16 to 15 to 13 on the LR2s, whereas kind of the MRs are staying at 13s across the board.

So just wondering why you are seeing that much more of a downtick on the LR2 market?.

Oh, okay. I mean, one of the factors that provides something of a floor to MR rates and Handy rates is the demurrage that they earn while they’re waiting.

So naturally, the elasticity to – of rates at the larger ships looks much greater than those in the smaller ships because they’re not waiting on the meter as much over the – in the long-haul fleet that they’re doing..

The second aspect, Ken, there’s just a – generally a higher base of around the LR2s than anything else. So in periods of weakness, they have gone – they’re a little bit looking at VLCCs or capes in the other markets. They’re going to go down harder and in periods of re-strengthening, they go up harder.

Just like you’re seeing in our fourth quarter guidance, the LR2s have accelerated out and already had a greater change from 3Q to guiding 4Q than the MRs have..

Okay, thanks for that.

And then similarly, on your pool capabilities, as the Navig8 vessels have moved over or mostly moved over to your pools, can you talk about your premium to market rates? Do you see that accelerating kind of holding firm, maybe just talk about the pool typical gap that you see in the rest of the market?.

Well, naturally, with scale, with greater scale, you become the source for your customers of every additional move or cargo. So your information advantage and your ability to serve on backhauls triangulation expand with scale. And so that’s what we’re seeing both in terms of repositioning these ships.

LR2s, as we’ve covered in previous calls are not an AG East dedicated animal anymore. They’re doing backhauls from the Far East. They’re coming into the Northern Europe or even coming across the West Africa and the U.S. Gulf.

And so we’ve scaled your – on a global basis, your customers turn to you for a solution that they simply will not think of when you’re the owner of fewer assets or operate a fewer assets. And similarly, third-party owners look to us as good and aligned managers of quality assets.

So we find partners wanting to team up with us for the same reason, for scale and the access to information..

And we would expect that now the two fleets have been put together and we’ve been able to start to talk to customers now the fleets have been put together and clearly the biggest and the highest quality on the block.

We would expect those dynamics that Cameron’s talking about to increase and create a chance for us to widen further our gap between what we’re able to earn and what the general spot market indexes would be..

Great, it’s exactly what I was asking. And then, lastly, I guess to follow-up on the – I think the last two questions were kind of hitting on this. But Robert, you said you were happy with the size of the fleet unless you aren’t going to place new orders and obviously decided to acquire Navig8 and scale significantly.

Maybe your thoughts on today, I guess, previously you sort out – we’re fine no more ordering. But if – as Emanuele said, there’s a 1% order book.

Do you see others starting to look at the yards to order? Is that something you would want to do if you start seeing rates improve?.

No, I think, you’ve got a long way to do. We really, really got a super modern fleet. And your – so we are not in the yards discussing anything. I think that we – our shareholders, ourselves, we would be great to actually have a period where our lack of CapEx in both dynamics is enabling us to get – all get – I know it’s a bit of a crude price.

But it would be great to get actually paid for the trade, both as management and more importantly for our shareholders. For our competitors, it’s a little bit difficult to see where they go. I mean, hopefully, their companies will take the consolidation route. Some of their fleets are a little trapped, because they haven’t got any new ships.

But I think – so you’re always going to have some new ordering somewhere. So far, though people have remained discipline.

But I think with the likes of STNG, STNG should at some point start paying at a premium to those type of companies, because some of those companies with old fleets are definitely going to have an increase in their operating costs and their CapEx for operating and they might have an increase in outflow going out for CapEx growth by placing orders that obviously you wouldn’t get any income on – in a strong market for two and two-and-a-half years..

Yes. Okay. Great. Helpful insights. Thank you..

Thank you..

Thank you. Our next question comes from Herman Hildan with Clarkson. You may begin..

Good morning, guys..

Good morning, Herman..

Good morning. So my first question, looking into the multi-year recovery, as you called it, ahead of us, I think, most of us agree as someone else said, what do you think is the key difference in the years ahead compared to when we started the last, call it, market upturn [Multiple Speakers].

I would tell you two differences that exist right now across shipping that have never existed since the war, right? The first is that we are going into increasing regulatory environment that will put pressure on cost of vessels, running your vessels, age of existing vessels, that is a definite.

The next thing is that in the 1960s rally, so there’s some classic rallies in shipping in the 1960s, that rally was also met by a huge expansion of newbuilding capacity in the United States and Europe. The 1970s was met by huge expansion capacity in Japan. The 1980s rally was met with huge expansion and the birth of Korean shipbuilding.

And the 2000s, the last rally in shipping was met by the huge expansion of China. Right now, for the first time ever since the war, if we look at shipping, there is no geographical or continental or country new area that you can look at that is going to move to the world leapfrog and become the world’s number one shipbuilder.

That’s what’s so significant. Japan became the world number one over Europe in the 1970s, Korea became the world’s number one over Japan from the 1980s, China became the world’s number one in the 2000s over Korea. There’s nothing that it could even become world’s number three or four out there.

That is what could set shipping in its entirety up for a very good run if the world economy continues to go through a period of expansion and predominant peace. That’s the biggest difference..

Yes, I think, that’s very interesting point. I mean, we start this recovery, I guess, with the lowest, for example, MR order book this millennium really.

And I’m kind of where – do you have a sense of kind of what kind of prices do you think would be needed, for example, on the MR to get meaningful to – or SPP, for example, to start building ships or MRs again, I don’t now, any color on those?.

I don’t know. We generally have lost contact with the everyday prices and structures of the shipyards having not looked at them for a reasonable while. So I wouldn’t like to speculate on that.

It’s quite clear though that we’re going – those prices are getting higher anyway just simply, because those countries – their economies are generally improving, lifestyles are improving, that there are different job opportunities, land itself is becoming more expensive. The commodity inputs are becoming more expensive.

There is some form of inflationary tendency that goes above and beyond whatever they needed to – whatever they need to break-even to.

And then more importantly than that is put the MR order book, put the MR order book in the context of the container market, the LNG market, the crude market growth, the dry cargo market growth, the gas market growth, and the general position, that’s what I think makes it pretty exciting..

Okay that’s – and then just the final, I guess, the cash flow question, which would be to Brian. Proceeds from this possible vessel increased by $27 million compared to Q2, which I assume is the STI Sapphire which closed in July.

I’m just curious where in your cash flow confine the closing of the first three sale leasebacks that you’ve done in the third quarter?.

You can – I’ll go over that later on...

He can go over that later on..

I’ll show it to you in the cash flow statement..

Okay. All right. Thank you. That’s all..

All right..

Thank you..

Thank you very much. I think we appreciate all your time this morning. I know, it’s near the open, and thank you, again. See you next quarter..

Ladies and gentlemen, this concludes today’s conference. Thank you for your participation. Have a wonderful day..