Baltic Dirty Tanker Index

Baltic Dirty Tanker Index, BDTI, chart, graph

Double Hull (DHT) Shares Rise on Upgrade

Shares of Double Hull Tankers Rise After Analyst Suggests Stock Is Undervalued
January 18th, 2007

NEW YORK (AP) -- Shares of Double Hull Tankers Inc., which owns and operates a fleet of crude oil tankers, soared Friday after a Citi analyst raised the stock to "Buy," citing its improved value following steep sell off.

Analyst John Kartsonas said that despite his negative expectations for the tanker market in the next several years, Double Hull's current share value provides a buying opportunity for investors.

He noted that the company's recent implementation of a fixed quarterly dividend provides steady benefits for investors as well, despite some investors frowning over the new 25 cent-per-share dividend as a cut from previous quarters.

Quarterly dividends ranged between 37 cents a share and 44 cents a share in 2007.

"Management's decision to reduce the dividend might have upset some investors, but the reality is that longer term it should prove to be a wise decision -- a company cannot pay dividends that are well above earnings and rely purely on the equity markets for growth," Kartsonas said in a note to clients. "Given the importance of dividends in the shipping world, we believe investors will continue to view Double Hull as a dividend provider but this time with the additional benefit of growth."

He raised his estimates for 2008, citing stronger-than-expected first-quarter vessel rates and newly-acquired carriers.

However, lowered his 12-month price target to $12 from $14, saying he expects higher costs in 2008. He also lowered his 2009 estimates on lower expected vessel rates.

Shares of Double Hull rose 90 cents, or 9.5 percent, to $10.40 Friday. The stock has ranged between $9.32 and $18.79 in the past 12 months.

Bloomberg Roundup

Asian Aframax Rates Fall Most in Two Years as Charters Decline
By Katherine Espina
Jan. 9 (Bloomberg)

Asian aframax hiring rates fell the most in two years as chartering demand slowed following a pick- up in hiring before the Christmas holidays and the Northern Hemisphere winter.

The rate to transport 80,000 metric tons of fuel from Kuwait to Singapore dropped 6.9 percent to Worldscale 220.42 yesterday, according to the London-based Baltic Exchange. That's the biggest one-day decline since Jan. 3, 2006.

Aframax rates on the Middle East-Singapore route have fallen 25 percent since the end of last year. Shipping a ton of fuel on the route costs $22.43, based on Bloomberg data.

``The build-up of tonnage is the main concern, and a substantial boost in enquiry levels is needed to turn things around,'' Oslo-based analysts Henrik With and Glenn Lodden at DnB NOR Markets, said in their weekly report. ``Sentiment for suezmaxes and aframaxes is quite muted.'' A suezmax can move one million barrels of oil.

The demand for supertankers, also known as very large crude carriers or VLCCs, will influence the market for aframaxes, according to Matsui & Co.'s Katsunori Nishikawa, general manager for chartering at the Tokyo-based company's shipbroking division.

Freight rates for supertankers on the benchmark Persian Gulf-to-Japan route have fallen 31 percent since end-2007, according to data on the Baltic Exchange. Rates on the route slumped 16.5 percent to Worldscale 191.47 yesterday, according to data on the Baltic Exchange.

Two aframaxes, capable of moving a total of 211,778 tons of cargo, are so far scheduled to arrive in Singapore next week. That compares with five aframaxes with a combined capacity of 538,257 tons arriving in the city state this week, according to Bloomberg data.

Persian Gulf Tanker Rates May Fall as Owners' Confidence Wanes
By Alaric Nightingale
Jan. 10 (Bloomberg)

The cost of shipping Middle East crude to Asia, the world's busiest market for supertankers, may fall for an 11th trading day as an increase in ship supply undermines owners' confidence.

The benchmark hire rate for very large crude carriers, or VLCCs, sailing to Asia climbed at the fastest pace in at least 16 years in November and December, prompting oil companies to withhold cargoes to temper the gains. The key rental price has dropped every day since Dec. 19, the Baltic Exchange data showed.

``It's dropping in the way that it came up,'' Nikos Varvaropoulos, an Athens-based broker at Optima Shipbrokers, said by phone today. ``Every charterer is trying to fix lower and lower and lower. It's a matter of mentality.''

Chevron Corp., the second-largest U.S. oil company, hired the tanker Astro Chorus at a rate of 175 Worldscale points, according to a report today from Paris-based shipbroker Barry Rogliano Salles. That's 0.6 percent higher than the London-based Baltic Exchange's benchmark rate of 173.91 points.

Astro Chorus, built in 2001, is fitted with two steel hulls to cut the risk of an oil spill. Supply of cheaper-to-hire single-hulled tankers is ``very good,'' said Varvaropoulos. The exchange's key assessment, which is for vessels up to 15 years old, takes into account both vessel types.

There are 115 modern two-hulled tankers available for hire within the next 30 days, according to the report from Barry Rogliano Salles. There were 111 yesterday.

Booking Ships

Still, refineries have yet to begin booking the ships they need to load in February and there are about 30 outstanding cargoes for January. By this time last month, all of December's Middle East cargoes had been assigned to tankers.

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 173.91 Worldscale points, owners of double-hulled very large crude carriers, or VLCCs, can earn about $141,763 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, and marine fuel prices for Fujairah compiled by Bloomberg.

Asian Aframax Charter Rates Fall an Eighth Day on Tanker Supply
By Katherine Espina
Jan. 11 (Bloomberg)

Asian aframax hiring rates fell for an eighth day to the lowest in six weeks as slowing demand for bigger tankers trickled down to smaller vessels.

The rate to transport 80,000 metric tons of fuel on an aframax tanker from Kuwait to Singapore dropped 3.9 percent to Worldscale 183.75 yesterday, bringing the decline so far this week to 26 percent, according to the London-based Baltic Exchange. The rate is the lowest since Nov. 28. Shipping a ton of fuel on the route costs $19.94, based on Bloomberg data.

Aframax rates on the Middle East-Singapore route have slumped 33 percent since the start of this year as chartering demand slowed following a rush in hiring before the Christmas holidays and the Northern Hemisphere winter. Charter rates for supertankers, which can carry two million barrels of oil, on the Middle East-Japan route have plunged 34 percent 10 days into the new year because of an increase in the supply of ships.

``The market sentiment in the very large crude carrier market is weak and it's affecting aframaxes and suezmaxes,'' according to Takeshi Ando at the tanker team of shipbroker Matsui & Co. in Tokyo. A suezmax can move one million barrels of oil.

The rate on the benchmark Persian Gulf-to-Japan route declined 4 percent to Worldscale 166.88 yesterday, according to data on the Baltic Exchange.

The market's main concern is the ``build-up of tonnage'' and only a substantial rise in demand will turn rates around, according to Oslo-based analysts Henrik With and Glenn Lodden at DnB NOR Markets, in their weekly report.

Persian Gulf Oil-Tanker Rates May Decline on Canceled Bookings
By Alaric Nightingale
Jan. 11 (Bloomberg)

The cost of shipping Middle East crude to Asia, the world's busiest market for supertankers, may fall for a 12th day on signs oil companies are canceling bookings and waiting for the market to drop.

Companies provisionally hire ships subject to port approvals and other conditions. It can take between one day and one week for an oil company to commit irrevocably to a ship rental and it costs nothing to cancel a conditional booking.

Oil companies are ``just fixing and failing and fixing and failing,'' Per Mansson, a tanker broker at Nor Ocean Stockholm AB, said by phone today. ``They make a deal, wake up the next morning, see the market is lower, and fail it.''

Chartering officials withheld cargoes since the end of 2007 to temper the fastest gain in tanker rates in at least 16 years in November and December on the benchmark voyage between the Middle East and Asia. That may have created a backlog of cargoes that will curb further declines, according to Mansson.

No new tanker bookings were reported today by shipbrokers. The London-based Baltic Exchange's benchmark assessment for voyages to Asia fell 4 percent to 166.88 Worldscale points yesterday, almost half the level it reached on Dec. 18.

There are 114 modern tankers available for hire within the next 30 days, according to a report today from Paris-based Barry Rogliano Salles. Yesterday there were 115.

Persian Gulf Tanker Rates May Drop Amid U.S. Recession Concern
By Alaric Nightingale
Jan. 15 (Bloomberg)

The cost of shipping Middle East crude to Asia, the world's busiest route for supertankers, may extend 13 days of declines on concern that U.S. demand for oil will drop.

Goldman Sachs Group Inc. joined Merrill Lynch & Co. last week in estimating that the world's largest economy may already be in a recession. That will curb energy demand, Boone Pickens, chairman of Dallas-based hedge fund BP Capital LLC, said yesterday.

``Traders will disappear and oil companies will run their refineries with less output'' in a recession, Per Mansson, a tanker broker at Nor Ocean Stockholm AB, said in an e-mailed note today. The number of tankers booked has been ``much less'' than normal, a sign oil demand may already be waning, he said.

China International United Petroleum & Chemical Corp., or Unipec, hired the tanker Hyundai Star at a rate of 125 Worldscale points, according to a report today from Paris-based shipbroker Barry Rogliano Salles. That's 16 percent below the London-based Baltic Exchange's benchmark rate of 148.44 points for voyages to Asia.

Hyundai Star, built in 1995, probably cost less to hire than the benchmark because it's fitted with one steel hull separating its cargo from the ocean. The exchange assessment also includes bookings of double-hull vessels that cut the risk of an oil spill.

Asian Aframax Charter Rates May Extend Decline on Vessel Supply
By Katherine Espina
Jan. 16 (Bloomberg)

Asian aframax charter rates may extend declines after falling for an 11th day as a dearth of cargoes causes a surplus of tankers.

The rate to transport 80,000 metric tons of fuel on an aframax tanker from Kuwait to Singapore dropped 0.71 percent to Worldscale 174.17 yesterday, according to the London-based Baltic Exchange. Shipping a ton of fuel on the route costs $17.45, based on data compiled by Bloomberg.

``There's a lack of activities and I don't see any indication that the market has hit bottom,'' according to Matsui & Co.'s Katsunori Nishikawa, general manager for chartering at the Tokyo-based company's shipbroking division. ``We see more declines as very large crude carrier rates are down as well.''

Aframax rates on the Middle East-Singapore route have Slumped 36 percent this month as chartering demand slowed following a rush in hiring before the Christmas holidays and the Northern Hemisphere winter. Charter rates for supertankers, which can carry 2 million barrels of oil, on the benchmark Middle East-Japan route have plunged 55 percent in the past 14 days, influencing fees for smaller tankers.

The rate to hire a supertanker, also known as a very large crude carrier, on the benchmark Persian Gulf-to-Japan route declined 2.2 percent to Worldscale 145.16 yesterday, according to the Baltic Exchange data. That's the lowest since Nov. 26.

`Bloated Pool'

``Shipowners do not have the best bargaining position currently,'' Oslo-based Henrik With and Glenn Lodden at DnB NOR Markets wrote in their weekly report. While demand may rise because of February cargoes, there is a ``bloated pool'' of supertankers, suezmaxes and aframaxes, With and Lodden said.

A suezmax can transport 1 million barrels of oil while an aframax can move 650,000 barrels.

Still, tanker demand usually rises ahead of the week-long Chinese Lunar New Year celebrations in February, shipbrokers said.

``I do hope there will be more activities as usually before the Chinese New Year, charterers would cover their forward positions, but it seems that fuel oil demand from China is not that much,'' Nishikawa said by phone from Tokyo.

China, the world's biggest oil user after the U.S., imported 14 percent less fuel oil last year, with shipments dropping to 24 million tons, according to preliminary data from the Beijing-based Customs General Administration yesterday.

Persian Gulf Tanker Rates May Drop as Owners Vie for Cargoes
By Alaric Nightingale
Jan. 17 (Bloomberg)

-- The cost of shipping Middle East crude to Asia, the world's busiest route for supertankers, may drop for a 15th day after shipowners with vessels for hire in January failed to find cargoes.

There are 34 very large crude carriers, or VLCCs, still seeking cargoes to load in January compared with 10 to 15 outstanding consignments, Paris-based shipbroker Barry Rogliano Salles said in a report today.

``You have owners that are open in January and they will look at February dates,'' Mathieu Philippe, a tanker broker at Barry Rogliano Salles, said by phone today. The decline in rates will probably halt next week, he said.

VLCC rates to Asia plunged 59 percent since December as oil companies withheld cargoes to halt the fastest gains in prices for at least 16 years. The International Energy Agency yesterday cut its forecast for first-quarter global crude demand by 100,000 barrels a day, citing warmer-than-normal U.S. weather.

CPC Corp., Taiwan's state oil refiner, hired the tanker Grand Lady at a rate of 83.5 Worldscale points for a voyage to Asia. That's 36 percent below the London-based Baltic Exchange's benchmark assessment of 130.78 points for voyages to Asia.

The rental rate is lower than the Baltic Exchange's assessment because Grand Lady is fitted with a single hull and because its owners chose to send the vessel to Asia so that it could be converted into an iron-ore carrier, Philippe said. The Baltic Exchange also takes into account prices of double-hull tankers that cut the risk of an oil spill.

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.

Hire 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 130.78 Worldscale points, owners of double-hulled very large crude carriers, or VLCCs, can earn about $100,854 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, and Bloomberg marine fuel prices.

Baltic Dirty Tanker Index Chart Test

Gulf rates could drop as tankers chase cargoes

Gulf rates could drop as tankers chase cargoes
Bloomberg
Published: January 07, 2008, 00:29

Oslo: The cost of shipping Middle East crude to Asia, the world's busiest route for supertankers, may fall for a seventh trading day as ships that are available for hire within the next several days compete on price for cargoes.

Refineries have hired ships for more than half of January's expected cargoes, according to an e-mailed report from Paris- based Barry Rogliano Salles.

At the same time, some owners failed to find cargoes at near-record rental rates and may now compete on price to haul the consignments, Mathieu Philippe, a Dubai-based broker for the company, said by phone.

"The only problem is vessels that are going to be open within 10 days are going to be cheap," he said.

"If they don't fix now, they are going to have to swallow a lot of waiting time" earning nothing. Once those carriers have found cargoes, Phillipe said he expects rental rates to rally again.

Very large crude carrier, or VLCC, rates soared in November and December after Opec increased crude oil production and amid signs Japanese refineries may have hired extra vessels to replenish stockpiles that were near their lowest in 20 years.

Royal Dutch Shell Plc, Europe's biggest oil company, hired the tanker Irene SL at a rate of 280 Worldscale points, according to Barry Rogliano.

Discharge options

That's 11 per cent above the London-based Baltic Exchange's benchmark assessment of 250.63 points for shipments to Asia.

The booking may have cost more than the benchmark because Shell took out alternative discharge options, including to the Red Sea.

Increased discharge options, especially when they include shorter-distance voyages such as to the Red Sea, normally cost more because owners can't plan follow-up voyages.

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 US 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 250.63 Worldscale points, owners of double-hulled VLCCs, can earn about $223,319 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, and Bloomberg marine fuel prices.

http://www.gulfnews.com/business/Oil_and_Gas/10179910.html