After last month's slump, ocean freight has started firming up ever since Hurricane Katrina ravaged the oil refineries in the US.
The freight shot up by 20 per cent in the second week of September across all segments compared with the first week. This was mainly because of the beginning of winter in Europe and increased crude oil imports by Hurricane Katrina-hit refineries in the Gulf of Mexico, a shipping analyst said.
The rally in freight would help Indian shipping companies register a healthy performance as China was also planning to import more iron ore to raise its inventories, he said.
According to Mercator Lines Director Shalabh Mittal, the demand will further surge once the hurricane-hit refineries resume operations. "The demand will be more as very large crude carriers undertake voyages of about 70 to 90 days," Mittal said.
Nine out of the 17 oil refineries in the hurricane area, with about 1.4 mbd capacity each, are non-operational and shipping companies will explore crude oil movement from West Africa and Venezuela to satisfy the requirements of these refineries.
Clean tanker rates have soared 62 per cent. Suezmax and Aframax rates were up nine per cent each during the first week of September, while the VLCC freight went up by around 4 per cent compared with the August 2005 average.
"After a lag, the VLCC tanker rates have also moved up from $20,997 per day on August 30 to $25,648 per day on September 8," an analyst said.
The Suezmax tanker rate, which started firming up in the last week of August, rose to $25,100 on September 8 from an average of $ 22,842 a day in August 2005.
The Aframax tanker rate average touched $15,963 in the first week of September from an average of $14,668 a day in August. Clean tankers firmed up to $24,243 from $14,996 in the same period.
The rising freight has firmed up Baltic Freights Indices. The Baltic Dry Index reported a 9.07 per cent rise in the first week of September over August. The Baltic Capesize Index and Handymax Index were up around 15 per cent each, while the Baltic Panamax Index marginally declined by 2.8 per cent.