Posted on 10/23/2008 5:40:07 AM PDT by thackney
Freight rates to ship LPG from the Middle East to Japan have fallen to their lowest in 20 months, tumbling from a record high of $82/mt in late July to $22.44/mt Thursday.
The drastic decease in freight prices was due to the lack of spot cargoes moving out of the Middle East and lower bunker fuel prices, VLGC ship brokers said.
"The Saudis don't sell any spot tons now, and the market looks dark at least until Christmas. Many of the VLGCs are in the spot market are totally dependant on tons that are not on contract," a VLGC ship broker said.
The London-based Baltic Freight Index, which LPG traders and ship owners use as a key shipping price indicator, fell past the psychologically important level of $30/mt on October 14 and has since continued its steep decline.
Freight levels, which hit their weakest since February 23 last year on Thursday, have fallen 66% since the start of September, when the Baltic Freight Index hovered around $66/mt.
Low bunker fuel prices and the lack of spot cargoes were largely responsible for the dip in freight rates, although fears of recession and fleet growth also weighed on the shipping prices, industry sources said.
Traders said they expected a gradual revival of freight levels in 2009.
I wonder if OPEC and their letting the energy prices get out of hand for the last few years is starting make them understand what a crisis they caused around the world. To have any kind of power over the rest of the world is an incredible responsibility that can bear results that eventually come back to you.
Ronald Reagan
"An appeaser is one who feeds a crocodile, hoping it will eat him last."
Prime Minister Winston Churchill
Great homepage, thackney
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