The cost of transporting Middle East crude oil to Asia, the world's busiest market for supertankers, may fall as year-end holidays slow demand for cargoes. Some ship owners are trying to attract bookings by cutting rates, which have risen more than fivefold since the start of November. "Owners will want to catch the high rates and will offer a little less to get them," Charlie Fowle, a director at London shipbroker Galbraith's Ltd., said in an e-mailed note today.
Rental rates surged earlier this month amid signs Japanese refineries were buying tanker-loads of oil to replenish depleted stockpiles and as the Organization of Petroleum Exporting Countries pumped extra crude.
China International United Petroleum & Chemical Corp., or Unipec, hired the tanker Hyundai Banner at a rate of 232.5 Worldscale points, according to a report today from Simpson, Spence & Young Ltd. That's 15 percent below a comparable assessment for voyages to Japan, according to data compiled by Bloomberg.
Hyundai Banner is fitted with one steel hull. Tankers fitted with double hulls to cut the risk of an oil spill normally cost more to hire. The London-based Baltic Exchange's last assessment was on Dec. 24 and the next will be on Jan. 2.
Worldscale points are a percentage of a nominal rate, or flat rate, for more than 320,000 specific routes. Flat rates for every voyage, 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.
$251,357 a Day
Each flat rate assessment gives owners and oil companies a starting point for negotiating hire rates without having to calculate the value of each deal from scratch.
At 275 Worldscale points, owners of double-hulled very large crude carriers, or VLCCs, can earn about $251,357 a day on a 39-day round trip from Saudi Arabia to South Korea, based on a formula by R.S. Platou, an Oslo-based shipbroker, 2007 flat rates, and Bloomberg marine fuel prices.
Frontline Ltd., the world's biggest VLCC operator, said Nov. 15 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.
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