14.01.2008 - European rates collapse by 20% in three weeks

Monday 14 January 2008

Jamie Dale

FREIGHT rates slumped last week in the 1m barrel tanker market after thin inquiries from charterers and limited delays in the Turkish Straits, writes Jamie Dale.

Rates for tankers of all sizes in the European market continued to slide for an eighth consecutive day on Thursday.

“If one looks at the European tanker index, from the high 1,130 registered in December and today’s 915, we can see that in only three weeks the market has already lost 20%, and this is massive,” said an analyst at shipbroker Riverlake.

“But then again, 915 is close to what the markets are generally at.”

For owners lucky enough to fix a cargo in the Black Sea, any relief would soon be washed away by the low rates. Black Sea rates fell by W65 points from Monday to W172.92 on Wednesday, according to the Baltic Exchange route index.

Fearnleys noted that the fall in suezmaxes was a result of “an absence of inquiry [which] resulted in falling rates and rising vessel inventories in all areas”.

The Riverlake analyst told Lloyd’s List that rates for owners fixing to carry crude from the Black Sea to Mediterranean fell to an average of W211 from W246 the previous week, or 14.3%. Rates on Thursday were being quoted at around W175, or $87,800 per day.

“There was not that much activity so the market is very quiet,” he added. “January dates seem to be all fixed.

“Delays at the Turkish Straits are down. This is also helping the low rates. They are actually not low rates, the market is starting to go back to normal rates.”

Trade out of West Africa also eased with the Baltic Exchange index falling 33% on Wednesday to W141.92 from W209.62 at the start of the week.

The Riverlake analyst noted that the average rate last week stood at W169, or $67,000 per day, down 25.7% from the previous week. Rates on Thursday were trading at around W130, or $44,000 per day.

In the cross-Mediterranean market, the average rate for carrying crude in 1m barrel tankers was around W201, or $90,000 per day, down 14.5% from the previous week’s W235, or $110,000. On Thursday rates were being quoted at around W165, or $70,000 per day.

“Aframaxes have been very busy, so what could happen next is the suezmaxes taking part cargoes in the coming weeks,” said the Riverlake analyst. “There are quite a few cargoes still to come out of North Africa, so activity will pick up.”

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