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Aframaxes, already this year s worst- performing oil tankers, arepoised for the lowest annual rates in at least 15 years asEurope s economic stagnation curbs demand, the region smost-accurate shipping analysts said. The 800-foot vessels will make about $12,000 a day in 2012, theleast since 1997, said Anders Karlsen, an analyst at Nordea Marketsin Oslo. His recommendations on the industry returned 25 percent inthe past year, more than any shipping analyst in Europe tracked byBloomberg. The prediction is 37 percent less than the second-halfaverage of $18,901 anticipated in forward freight agreements,traded by brokers and used to bet on future rates, for northwestEurope, the biggest market for Aframaxes. The vessels are struggling to win cargoes on all sides of theAtlantic, with European oil demand contracting for a sixth year ata time when the U.S. push for energy independence is driving downcrude imports to the lowest since 1999. That s drawing more SouthAmerican and West African supply to Asia on routes favoring verylarge crude carriers, displacing smaller Suezmaxes which in turnare competing with Aframaxes. With the situation in Europe, the picture for Aframaxes is justabysmal, said Erik Nikolai Stavseth, an Oslo-based analyst atArctic Securities ASA who anticipates an annual average of $10,000. VLCCs are taking out Suezmaxes, and Suezmaxes are taking outAframaxes, said Stavseth, whose recommendations returned 24percent in the past year, the second-best performance in theregion. Baltic Exchange Daily rates for Aframaxes, hauling 690,000 barrels, slumped 32percent to $14,911 since the start of January, according toLondon-based Clarkson Plc (CKN), the world s largest shipbroker.That compares with a 6 percent advance in earnings for VLCCs, whichload 2 million barrels, and a 24 percent retreat for Suezmaxes,with about 50 percent of the capacity. VLCCs carry the most oilworldwide, followed by Aframaxes, Clarkson data show. The slide in Aframax rates is being mirrored in other classes ofshipping. Capesize vessels hauling iron ore and coal are earning$4,812 a day, 98 percent less than their May 2008 peak, accordingto the London-based Baltic Exchange, which publishes daily ratesalong more than 50 maritime routes. Panamaxes, with about 50percent of the capacity, are making $7,138, 92 percent less thanthe all-time high set in 2008. The supply of Aframaxes will expand 6 percent this year as demandcontracts by the same amount, the worst ratio of any oil- tankermarket tracked by Clarkson. The fleet grew 14 percent since 2008, ayear in which rates peaked at $87,775, according to data from IHSInc. (IHS), a research group based in Englewood, Colorado.Outstanding orders at ship yards are equal to 7 percent of existingcapacity, the data show. Fastest Pace European oil demand will decline 2 percent to 14.7 million barrelsa day this year, the lowest since at least 1996, the Paris-basedInternational Energy Agency estimates. The region s refineries areshutting at the fastest pace in three decades as economies stagnateor contract and competition from U.S. rivals using cheaper gradesof crude intensifies. Aframaxes get 48 percent of their cargoesfrom Europe, Clarkson estimates. The U.S. is producing the most crude in 13 years after prices rosealmost fourfold in a decade, Energy Department data show. Companieswere drilling 2,329 wells last month, the most in a quartercentury, the data show. Aframaxes rely on North America for about14 percent of their cargoes, the same order of magnitude by whichimports carried on the vessels will fall this year, according toClarkson. The slump in European demand may reverse as its economiesstrengthen, with the International Monetary Fund predicting 2013growth of 0.9 percent in the 17-nation euro zone, from a 0.3percent drop in 2012. The 15 percent weakening in the euro againstthe dollar in the past year is aiding the monetary union smanufacturers, potentially boosting demand for energy. Extra Loadings More cargoes may emerge as Libyan output recovers from the war thattoppled Muammar Qaddafi in October. Output that slumped to 45,000barrels a day in August reached 1.4 million barrels last month,data compiled by Bloomberg show. It would have to add another150,000 barrels to reach the pre-war average, equal to about sixextra Aframax loadings a month. Extra shipments will also come from the Baltic Sea port of UstLuga, which Russia opened in March. It exported 219,900 barrels aday in April, according to data from OAO Transneft, which operatesthe pipeline to the terminal. Aframaxes are the most commonly usedvessels for Baltic Sea crude because of depth restrictions in thearea. The forecasts from Karlsen and Stavseth on Aframax rates, from lastyear s $12,726, are among the most bearish. The ships will earn$12,875 this year and $16,000 in 2013, according to the median of11 analyst estimates compiled by Bloomberg. Earnings averaged$50,010 in 2008, Clarkson data show. Offshore Wells Teekay Corp., based in Hamilton, Bermuda, is the biggest publiclytraded operator of Aframaxes, with 49 of the tankers, according toClarkson. It also owns vessels hauling liquefied natural gas andships that process and store oil extracted from offshore wells. The company will report a loss of $34.4 million this year,narrowing from $368.9 million in 2011, the mean of four analystestimates compiled by Bloomberg show. Shares (TK) of Teekay werelittle changed in New York trading since the start of January andwill advance 34 percent to $35.13 in the next 12 months, accordingto the average of eight forecasts. Additional cargoes from Libya and Russia probably won t be enoughto reverse the slump in overall European shipments. Refineryclosures removed as much as 1.3 million barrels a day of capacitysince 2009, almost as much as Spain consumes, data compiled byBloomberg show. Shipping Associations The slump in shipping reflects a glut of vessels rather thandeclining world trade, 90 percent of which is carried by sea,according to the Round Table of Shipping Associations. Shipments ofraw materials will rise 4 percent to a record 3.8 billion metrictons this year, Clarkson estimates. Global oil demand will expand0.9 percent to 90 million barrels a day, the most ever, the IEAestimates. Trade flows are changing, with China now consuming 9.9 millionbarrels a day, from 5 million barrels a decade ago, IEA data show.That in turn is shifting demand for different types of ship, withVLCCs now hauling more cargoes to Asia that were previously takenby Aframaxes, said Andreas Vergottis, the research director atTufton Oceanic Ltd., which manages the world s biggest shippinghedge fund. One VLCC turning up kills three Aframax cargoes, said HongKong-based Vergottis. Venezuela, the North Sea and North Africawill be cannibalized for Aframaxes. I am an expert from protectivephonecovers.com, while we provides the quality product, such as Blackberry Protective Case , Nokia Protective Covers, Bling Bling iPhone 4 Cases,and more.
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