Aframax Tanker Rates From Indonesia

Aframax Tanker Rates From Indonesia May Rise on Utility Demand
By Christian Schmollinger
May 23 (Bloomberg)

The cost of shipping 80,000 tons of crude oil from Indonesia to Japan may increase on demand from power utilities.

The rate for so-called Aframax tankers sailing from Indonesia to Japan remained at Worldscale 147.5 for a tenth day, according to data compiled by Bloomberg. That pegs the cost of shipping a barrel of oil on the route at $1.73.

Charters are hiring more ships to transport Duri crude from Indonesia to Japan, where utilities burn the oil in their power plants, ship broker Kats Nishikawa said. South Korean demand for the grade for refining into low-sulfur fuel oil has grown on power demand, PVM Oil Associates Ltd. said in a report today.

``The market is firming up some,'' Nishikawa, general manager with Tokyo-based ship broker Matsui & Co. said in an interview yesterday. ``Especially for early June, you're seeing a lot of cargoes going from Indonesia to Japan and Korea.''

SK Corp., South Korea's biggest refiner, hired the KWK Esteem for June 4 to travel from Senipah port in Indonesia to Ulsan at Worldscale 148.5, said a report today from brokers Seatown Shipbroking Ltd.

GS Caltex Corp. and Hyundai Oilbank Ltd. hired Aframax tankers to sail from Dumai in Indonesia to South Korea at rates between Worldscale 149 and 150, said Seatown.

Kuwait to Singapore

The rate for so-called Aframax tankers to Singapore from Kuwait was unchanged at Worldscale 139.42, according to the London-based Baltic Exchange. The cost of shipping on the route has fallen 5.5 percent since May 14.

Inventories of fuel oil in Singapore have surged to 15.2 million barrels, a six-month high, in the week ending May 16, according to government data. Imports of the product to Asia from the Middle East, called arbitrage shipments, have fallen as buyer demand has declined.

Shipping cost of gasoline and other clean petroleum products to Asia gained, according to the Baltic Exchange.

Shipping costs for 55,000 tons of products on the route to Japan from the Middle East rose to Worldscale 200 from 199.15, the highest in four months.

The rate to carry 75,000 tons of gasoline, naphtha or jet fuel from Singapore to Japan rose to Worldscale 139.17 from 138.13, the third straight day of gains, according to the Baltic Exchange.

The cost to ship 30,000 tons of oil products from Singapore to Japan remained at Worldscale 256.25, unchanged from the day before.