Asian oil freight VLCC rates fall under W300

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

28 Dec 2007

Asian freight rates for Very Large Crude Carriers (VLCCs) loading from the Middle East slid below W300 levels yesterday, as charterers wrapped up their requirements for January.  Rates for VLCCs on the benchmark Middle East Gulf-to-Japan route eased by about 45 points versus levels seen in the previous week, and remained broadly unchanged from the Baltic Exchange's settlement values seen late last week.  'The market seems to have settled into a lull, and should stay this way through the start of the new year. Everyone's done whatever business that needs doing for the year,' a Singapore-based shipbroker said.  Yesterday, there were inquiries for just 6-7 million barrels of tonnage versus 25-37 million barrels in the previous week, shipbrokers said. But shipbrokers said that with rates still at steep levels, charterers were likely to hold off working their February shipping requirements until the very last minute. 'The sudden jump in rates really spooked the market, so you kind of got the herd mentality going. But once better sense settled in, charterers realised that there was no need to overreact,' a shipbroker said. Along with the drop in rates, global tanker bookings for the week ended Dec 21 fell about 63 per cent versus the previous week. There were no tanker bookings for Japan or South Korea last week, versus the previous week when there were 12, while VLCC bookings from the Middle East to the United States or the east coast of Canada dropped to just 2 from 9 in the week ended Dec 4. The initial scramble for double-hulled tonnage following the accident involving the single-hulled Hebei Spirit and a crane barge in South Korea also cooled down, shipbrokers said. 'We saw a knee-jerk reaction after the Hebei Spirit accident when demand for double-hulls suddenly went through the roof, but again it's died down, now that we see no real shift in policy in single-hulled trading,' a shipbroker said. The accident left South Korea scrambling to contain its worst oil spill and raised concerns among charterers that international maritime authorities would hasten legislation on the phasing out of single-hulled ships before 2010.