FREIGHT MARKET TRENDS

VLCC FREIGHTS

RATES SURGED IN LATE 2007 AMID CONCERTED FIXING OF DOUBLE HULL VLCCs AFTER ‘HEBEI SPIRIT’ OIL SPILL OFF KOREA EASING OF RATES IN EARLY 2008 REFLECTED RETURN TO MORE ‘NORMAL’ CONDITIONS BUT KOREA & PHILIPPINES NOW COMMITTED TO EARLIER PHASE-OUT OF SINGLE HULLE SHIPS RECENT RISE IN SPOT RATES PARTLY DUE TO COST PRESSURES I.E. TO COMPENSATE VERY HIGH BUNKER PRICES VLCC MARKET STILL FIRM BY HISTORICAL STANDARDS, DESPITE HIGH OIL PRICES & LIKELY SLOWER GROWTH OF OIL DEMAND & GLOBAL ECONOMY

VLCC FREIGHTS CURRENT FIRM RATES TO EASTBOUND VLCC RATES ARISE FROM: – HIGHER REGIONAL CRUDE DEMAND (EXPANSION OF ASIAN REFINING CAPACITY) – ‘OLYMPIC EFFECT’ PROVIDING EXTRA BOOST TO CHINA’S OIL DEMAND – JAPAN’S ONGOING NUCLEAR POWER PROBLEMS

SUEZMAX FREIGHTS

SUEZMAX RATES BOOSTED IN LATE 2007 BY TIGHTNESS OF DEMAND FOR LARGE CRUDE TONNAGE RECENT FIRMNESS OF RATES PARTLY DUE TO HIGH BUNKER PRICES – NO SIGNIFICANT OIL PRICES FALL LIKELY IN NEXT FEW MONTHS, SO SUCH COST PRESSURES TO PERSIST FEW SUEZMAX DELIVERIES DUE IN 2008 – HENCE NO MAJOR THREAT TO RATES IN SHORT TERM FROM RISING TONNAGE SUPPLY BUT : FLEET GROWTH TO ACCELERATE RAPIDLY IN 2009

AFRAMAX FREIGHTS

SPOT RATES CURRENTLY BELOW LATE 2007 PEAKS BUT STILL WELL ABOVE AVERAGE LEVELS SEEN FOR MUCH OF LAST YEAR GREATER DEMAND FOR CRUDE & FUEL OIL IN JAPAN – DUE TO OUTAGE AT TEPCO NUCLEAR PLANT – TO SUSTAIN HIGHER DEMAND ON EAST BOUND AFRAMAX ROUTES UNTIL QII 09 FALLING INDONESIAN EXPORTS AMID HIGHER DOMESTIC DEMAND TO BOOST SINGAPORE’S IMPORTS OF MIDDLE EAST OIL ? 2008 AFRAMAX NET FLEET GROWTH TO BE HIGHEST FOR 30 YEARS FURTHER RAPID FLEET GROWTH DUE IN 2009 & 2010 BUT MUCH OF THIS COMPRISES OF COATED UNITS

FUTURE OUTLOOK THE FOLLOWING FACTORS MAY DRIVE THE MARKET: – HIGH OIL PRICES & ECONOMIC SLOWDOWN HAVE PUT US DEMAND INTO REVERSE – IEA STILL CUTTING FORECASTS FOR 2008 WORLD OIL DEMAND – BEIJING OLYMPICS AND JAPAN’S NUCLEAR PROBLEMS ONLY A TEMPORARY BOOST TO OIL IMPORT DEMAND – OPEC STILL UNWILLING TO BOOST MEMBER’S CRUDE OIL OUTPUT. BLAMES HIGH PRICES ON SPECULATORS – TANKERS NEW BUILDING DELIVERIES TO ACCELERATE RAPIDLY IN 2009, ENTAILING MASSIVE NET FLEET GROWTH

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