Tanker Owners Fight Back

Thursday, August 16, 2001
Tanker owners, who have been retreating on freight rates for crude cargoes for several weeks, have started to fight back in recent days, especially for prompt loading dates, brokers said on Thursday.

The defiant mood was illustrated by the fixture of a VLCC from the Tankers International pool to Petronas at W57.5 ($0.45), about 40 percent above the prevailing market rate.

Loading in the Mideast Gulf is scheduled for two days' time with discharge in Malacca, brokers said.

"Basically, Petronas left it too late and Tankers International had the only ship capable of making the date," said a London broker. "But any owner who thought they could get that rate for September loading would be very foolish."

Brokers pegged that market close to W41 ($0.39 per barrel).

Tankers International controls a large pool of VLCCs belonging to five of the world's largest tanker operators, allowing it to react quickly to such trading opportunities.

Freight rates for VLCCs collapsed 15 percent overnight last Wednesday as shipowners scrambled to book voyages out of the Mideast Gulf before September 1 when OPEC cuts were expected to hit tanker demand.

Brokers said that the market had stopped falling, however, and even on September loading dates it had bottomed out and would be moving back up next week.

"I had a trader asking for a VLCC to do a Westbound voyage at below W40 ($0.31), but I had to say there's no way," said a broker.

"An owner might do a short trip for rubbish money, but he won't lock himself in for 80 days on rubbish money," he added.

Similar opportunities were available to tanker owners in West Africa, where a million-barrel fixture was concluded for August 24 loading at W100 ($1.32 per barrel), 10 percent above the market.

But it was in the North Sea market that owners were really trying their luck on prompt dates. One owner said he had eight offers of cargo for a ship that was available between August 25 and August 31 and would be holding out for a very firm rate.

For an August 28 loading date, Norway's Ugland managed to get W150 ($1.17) from Esso Petroleum for a voyage from Hound Point to Fawley. Other owners were equally bullish.

"Teekay is saying it has an Aframax (70-80,000 tons) available in the North Sea at W162 ($1.27) for anyone who's interested," said a London broker.

The offer is nearly 50 percent above the market, which stands at around W107 ($0.80 per barrel) for September loading dates. - (Reuters)

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