Bloomberg News

VLCC Hired at Year-Low Price for South Korea, Braemar Says

September 30, 2011

(Updates Baltic Exchange prices in fourth paragraph.)

Sept. 30 (Bloomberg) -- A supertanker was hired at the cheapest price this year for a shipment to South Korea, according to Braemar Shipping Services Plc, a unit of the U.K.’s second-largest publicly traded shipbroker.

The very large crude carrier, or VLCC, shipping a 265,000 metric ton cargo, was hired at 40.5 industry-standard Worldscale points, the lowest fixture rate so far this year for a supertanker on the Persian Gulf-Korea route, Braemar wrote in an e-mailed report today.

VLCCs shipping 270,000 ton crude oil cargoes to South Korea from the Persian Gulf are losing $3,000 a day, compared with daily earnings of $1,000 last week, Braemar wrote. Its calculations assume a round-trip, sailing at 14.5 knots with a cargo and 16 knots without. Reducing speeds can improve owners’ returns.

VLCCs on the benchmark Middle East-to-Asia route are losing $6,492 a day from a loss of $5,845 yesterday, according to data from the Baltic Exchange in London. The bourse doesn’t take speed reduction into account when calculating losses.

There are “multiple offers for a number of cargoes,” London-based EA Gibson Shipbrokers Ltd. said in an e-mailed report today. Returns from VLCCs on the benchmark route first turned negative Aug. 1, as a glut of available ships overwhelmed demand. Global demand for supertankers will expand 4.9 percent this year to 144.6 million deadweight tons, according to Clarkson Research Services Ltd., a unit of Clarkson Plc, the world’s largest shipbroker. The fleet will swell by 8 percent to 173.1 million tons, it estimates.

Ship Fuel

The price of ship fuel, or bunkers, advanced 25 percent from the start of the year to $638.01 a metric ton, data compiled by Bloomberg from 25 ports worldwide showed.

Charter rates for VLCCs declined 0.5 percent to 41.44 Worldscale points, according to the exchange. The 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.

The Baltic Dirty Tanker Index, an overall measure of shipping crude oil that includes vessels smaller than VLCCs, gained 0.3 percent to 697 points, according to the exchange.

--Editors: John Deane, Alastair Reed

To contact the reporters on this story: Michelle Wiese Bockmann in London at mwiesebockma@bloomberg.net; Rob Sheridan in London at rsheridan6@bloomberg.net

To contact the editor responsible for this story: Alaric Nightingale at anightingal1@bloomberg.net


Best LBO Ever
LIMITED-TIME OFFER SUBSCRIBE NOW
 
blog comments powered by Disqus