Asian Fuel Tanker Rates May Extend Declines on Refinery Works

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

19 Mar 2008

Asian hiring rates for large-range oil-product tankers may decline for a third week as maintenance shutdowns by refineries leave less fuel available for shipment.Hiring costs for a ship that can carry 75,000 metric tons of fuel, also known as a large-range 2, or LR2 tanker, on the Persian Gulf-to-Japan route fell 1.4 percent to Worldscale 142.50 yesterday, based on data from the London-based Baltic Exchange Ltd. The rate on that route dropped 2.7 percent last week and 1.7 percent the week before.Refiners in Asia typically perform maintenance and safety checks between April and June before the peak summer driving season. Japanese refiners led by Nippon Oil Corp. plan to shut 19 percent less capacity during the peak spring maintenance season this year, reducing the need for gasoline imports from Singapore and South Korea.The trading for LR2s ``should be quiet this week due to the shutdown schedules,'' Arata Uga, a shipbroker at Matsui & Co. in Japan, said by phone from Tokyo.Nippon Oil last week said it will shut the sole crude-oil processing unit at Marifu refinery in the country's west on March 15 for maintenance. The crude distillation unit has a capacity of 127,000 barrels a day and is scheduled to restart on April 24.Asia's second-largest oil processing industry will idle 10 crude distillation units, or 21.5 percent of capacity, in the second half of May and the first half of June, down from a maximum of 26 percent in 2007, based on a table compiled by the Petroleum Association of Japan and obtained by Bloomberg News.Smaller TankersCharter rates for smaller oil-product tankers bucked the decline in bigger vessels due to demand for short-haul voyages, shipbrokers said.Rates for large range 1 tankers also known as LR1s, or those which can carry 55,000 tons of oil products, may rise due to ''some activity, some short-haul demand,'' Uga said. The increase in rates will likely be gradual as there are no ``arbitrage cargoes,'' Uga addedIn arbitrage shipments, traders book cargoes to profit from price disparities between two regions.The following is a table of rates to charter smaller tankers capable of carrying less than 1 million barrels of crude oil or oil products on Asian routes as of March 17, according to the Baltic Exchange:---------------------------------------------------------------Route               Tons      Rate  Change  CarrierPersian Gulf-Japan 75,000  142.50  -1.44%    Oil Product TankerSingapore-Japan    30,000  210.00  +0.80%    Oil Product TankerMiddle East-Japan  55,000  182.12  +0.21%    Oil Product TankerKuwait-Singapore   80,000  141.25  +0.59%    Aframax