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Friday, 17 September 10
FREIGHT RATES TO DECLINE FURTHER - ICICI SEC


Broking firm ICICI Securities said tanker freight rates reported a sharp drop with rates of Suezmax and Aframax carriers declining by 16% to USD 8,625 and by 25% to USD 7,752 in the last month. VLCC carrier freight rates posted the maximum drop of 43% to USD 7,109 over the same period.

Going forward, it expects freight rates to decline further. The outlook for the same is given below:

Dry bulkers: Dry bulk freight rates are expected to decline in the second half of September 2010 after posting a marginal rise in the first half of the month. We are cautious as steel production in China continues to moderate. This will also result in a decline in import of iron ore and a resultant drop in Capesize vessel freight rates. China`s iron ore inventory of ~75 million tons is likely to moderate, going forward, as it scales down its steel production.

Tankers: Crude oil tanker freight rates are likely to remain muted in September on account of muted demand for crude oil and drop in crude oil shipments. Productcarrier freight rates are also expected to be muted in September 2010 on account of the weak demand scenario in US and Europe.

LPG carriers: LPG carrier rates are expected to continue to remain subdued in September 2010.

Offshore vessels: The utilization level is likely to improve marginally but vessel rates are expected to be stable in September. Despite the clampdown on offshore drilling in the Gulf of Mexico, oil exploration and drilling activities are likely to show strength in regions such as Latin America and West Africa.
Source:
IRIS



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