Persian Gulf Tanker Rates May Extend Gain as Demand Strengthens

News was prepared under the information support of Online Daily Newspaper on Hellenic and international Shipping "Hellenic Shipping News".

28 Sep 2007

The cost of shipping Middle East crude to Asia may rise for a ninth day as demand accelerates in the world's biggest market for supertankers for vessels due to load next month. Refineries may book as many as 115 very large crude carriers, or VLCCs, to load next month, Mathieu Philippe, a tanker broker for Paris-based Barry Rogliano Salles, said by phone from Dubai today. That's 16 percent above the 99 consignments they will collect in September.  There was a ''massive amount'' of demand in the week to Sept. 21 that curbed tanker availability by about 20 vessels, Philippe said, adding that hire rates may rise by ``a couple of points'' for the next two weeks. ''There must have been a bit of compensation for the quiet month we had in September.'' Singapore Petroleum Co. hired the tanker Universal Peace at a rate of 70 Worldscale points, according to a report today from Athens-based Optima Shipbrokers. That's 4.5 percent above the London-based Baltic Exchange's comparable rate of 66.95 points for such voyages. Worldscale points are a percentage of a nominal rate, or flat rate, for more than 320,000 specific routes. Flat rates, quoted in U.S. dollars a ton, are revised annually by the Worldscale Association in London to reflect changing fuel costs, port tariffs and exchange rates. At 66.95 Worldscale points, owners of modern VLCCs can earn about $30,108 a day on a 24-day round trip from Saudi Arabia to Singapore, based on a formula by R.S. Platou, an Oslo-based shipbroker, and Bloomberg bunker prices.  The Baltic Exchange's rate for voyages to Japan, the key benchmark for tanker companies and refineries, climbed to 64.38 points, paying about $31,104 a day for voyages of a similar distance, according to the same formula. The rate to Japan, also called TD3 and used to settle bets and hedging contracts based on the cost of hauling Middle East crude oil, has climbed every trading day since Sept. 9. Frontline Ltd., the world's biggest VLCC operator, said Aug. 22 it needs $30,000 a day to break even on each of its supertankers. Bookings for VLCCs sailing from the Middle East to Asia account for 47 percent of global demand for the carriers, according to New York-based McQuilling Brokerage Partners LLP. Shipments to the U.S. and Caribbean, the second-biggest market, account for 14 percent of demand for supertankers.