Asian Product Tanker Rate Falls on Dearth of Long-Haul Voyages

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

31 Oct 2007

Asian long-range oil-product tanker rates fell to the lowest in almost nine months on a dearth of long-haul shipments, leaving more ships searching for cargoes. The rate to hire a ship that can carry 55,000 metric tons of oil products, a so-called long-range 1 or LR1 tanker, to Japan from the Middle East dropped 0.5 percent to Worldscale 149.81 yesterday, according to the London-based Baltic Exchange. The rate is at the lowest level since Feb. 5. ''The number of vessels is higher than normal and there's no sign of new cargoes, no long voyages,'' to the U.K. and the rest of Europe, Arata Uga, a shipbroker at Matsui & Co. in Japan, said by phone from Tokyo. About 52 LR1s are available for November shipment, Uga said today. ''I see the bottom at may be Worldscale 140.'' Rates for LR1 tankers have fallen the past six days, bringing the decline to 8 percent so far this month. A 1.3 percent rise in oil inventories in Japan, the world's third- largest oil consumer, has cut demand for product tankers. Oil inventories in Japan rose to 15.2 million kiloliters (129.5 million barrels) in the week of Oct. 17 from 15 million kiloliters a week earlier, the Petroleum Association of Japan said Oct. 24. ''The LR1s continue to be weak, with the market over tonnaged and little activity,'' said London-based E.A. Gibson Shipbrokers Ltd. in its Oct. 26 report. ''Voyages to the west are at a lowly $1.75 million. With levels being this low, the returns on the ships are around $10,000 per day, the owners are taking voyages simply to minimize their losses.'' Still, the hiring rate for a tanker that can move 75,000 metric tons of fuel, a so-called long-range 2 or LR2 tanker, rose because of a lack of vessel, Uga said. The rate, which fell every day in September, ''may have hit bottom,'' he said. ''There will be many LR2s after mid-November so that will put downward pressure on rates.'' The rates above are in Worldscale points, which are a percentage of a nominal, or flat rate, for a specific route. Flat rates, quoted in U.S. dollars a ton, are revised yearly by the Worldscale Association in London to reflect changing fuel costs, port tariffs and exchange rates.