The cost of shipping Middle East crude to Asia, the world's busiest route for supertankers, may curb four days of gains as Chinese New Year approaches, curtailing cargo demand from the nation's oil companies.  ''It's Chinese New Year next week, so we'll have little activity,'' Halvor Ellefsen, an Oslo-based broker at SeaLeague AS, said in an e-mailed note today.
The demand for tankers to load Middle East cargoes in February will likely leave between 15 and 20 very large crude carriers, or VLCCs, for hire at the start of March, said Ellefsen. Still, the supply of ships favors owners more than it has for a ``long time,'' he said.
Tanker rental rates, down 55 percent this year, surged 56 percent since Jan. 25 as refineries sought ships for February cargoes, reducing the supply of available carriers.
PTT Pcl, Thailand's biggest company by market value, hired the tanker Golden Jewel at a rate of between 97.5 and 102.5 Worldscale points, according to a report today from Athens-based Optima Shipbrokers. That's as much as 24 percent below the London-based Baltic Exchange's assessment of 127.5 points for a comparable voyage to Singapore.
Golden Jewel, built in 1994, probably cost less to hire than the benchmark because it's fitted with a single layer of steel separating its cargo from the ocean. The Baltic Exchange's assessment for Singapore is based on ships up to 20 years old and also includes double-hull tankers that are normally more expensive to hire because they cut the risk of an oil spill.
Double-Hull Carriers
Out of the 477 VLCCs built since Feb. 1, 1988, 72 percent are fitted with full double hulls, according to Lloyd's Register- Fairplay data on Bloomberg.
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.
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 127.5 Worldscale points, owners of double-hulled VLCCs can earn about $87,915 a day on a 25-day round trip from Saudi Arabia to Singapore, based on a formula by R.S. Platou, an Oslo- based shipbroker, 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.