Asia crisis hits VLCC demand

Feb 25, 1998 01:00 AM

Jan. 8, 1998 Tanker owners and brokers are speculating that Asian demand for VLCCs will be severely dented by the region's financial crisis. Clarkson Research Studies said it appears the Asian economic crisis has already knocked 100,000 bpd off demand.
"Next year the figure may reach 500,000 bpd, and if China and India were to be affected by the crisis it could rise even further," the research arm of the London shipping broker said in its latest monthly Oil and Tanker Trades Outlook report.
Oil tanker owners association Intertanko says in its next market report for January 1998 that the decline in Asian demand for VLCCs has been sharp since November.
Quoting figures supplied by the research department of Japan's Mitsui O.S.K. Lines Ltd, Oslo-based Intertanko said spot fixtures to Korea plummeted to 6 in December 1997 from 25 in the same month the previous year.
Intertanko said: "We may not see the same fierce competition in 1998 between Korean and Japanese charterers for modern VLCCs boosting the freight rates for the whole market as we saw in 1997."
Clarkson said that with new VLCCs of 4.7 mm deadweight tonnes entering the market this year and another 15.7 mm dwt of large tankers in the year after and beyond, "VLCCs could find themselves in for a rough time over the next few years."
"It will be difficult for modern VLCCs to find other markets willing to pay a premium," particularly as the Atlantic basin will be awash with oil as North Sea and Latin American oil production increases in 1998, Intertanko said.

Source: not available
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