Seoul: The number of newly built tankers hired to ship Asian gasoil to Europe continues to swell, with Royal Dutch Shell PLC (RDSB) being the latest to take advantage of cheaper freight rates for maiden voyages, writes Dow Jones. Shell chartered the newly built Seamusic to carry 90,000 metric tons of ultra-low-sulfur gasoil from South Korea - with destination options that include Europe - around the end of July at a freight rate of about $1.7 million, shipbrokers say.
The trip is a spot voyage with no options for floating storage, a Singapore-based shipbroker said.
Shell declined to confirm the information, but a spokesman said the company frequently charters vessels. Rising demand for offshore storage in tankers has limited the availability of vessels, lifting freight rates slightly and lowering margins for traders.
Freight rates for LR-2 tankers sailing from Singapore to the U.K. continental shelf were pegged at $1.8 million in the week to July 17, a 24% increase from early May, when the floating storage craze began, according to an analyst at shipbroker Simpson Spence & Young Ltd. LR-2's typically carry between 80,000 and 160,000 tons of products.
New builds are less expensive to hire because they haven't been approved yet by oil majors to carry their products or dock at their terminals, the Singapore-based shipbroker said.
Also, new tankers destined to carry dirty products may offer a discount to transport clean products to initially get out west, a Europe-based shipbroker said.
Dirty products such as crude and fuel oil typically move west to east, making it difficult for a vessel built in Asia to find its first job, the shipbroker said. New tanks, however, haven't been contaminated and can store clean products without the need for a special coating.
At least four new builds have been heard fixed in July to carry Asian gasoil to Europe. This includes the Valcona, which is being time chartered around Aug. 1 by an unknown company to store 80,000 tons of South Korean gasoil off European shores at a freight rate of $16,000 a day, according to five shipbrokers.
Meanwhile, Shell is one of the more active companies shipping middle distillates to Europe from Asia in July, sending as much as 195,000 tons of South Korean jet fuel to Europe this month. In addition to Seamusic, it has booked the tanker Advance Victoria to carry 60,000 tons of gasoil from South Korea - with destination options that include Europe - around July 25, according to shipbrokers. [23/07/09]
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