Ocean Carriers

Spot Charter Market

For the time charter, as over 85% of the cargo was iron ore and coal industries, the demand for dry bulk capsizes strength mainly depends on the global economy. Shipping company will order new ships or scrap the old vessel to adjust market supply according to the market demand. In addition, the age of vessel will also affect the daily hire rate, which means the new ship will earn premium in daily hire rates and the old ship will receive a discount from the industry average. According to the Exhibit 5 for the average hire rates, it is known that the spot charter rates fluctuate more widely than time charter rates, i.e., the highs were higher and the lows were lower in the spot market. Therefore, we believe that the world economy, the relationship between supply and demand and the age of vessel are the 3 important factors that will affect daily hire rate.

Exhibit 5

|　 |1994 |1995 |1996 |1997 |

|Number of vessels |63 |33 |21 |9 |

Moreover, it shows that 33 new vessels will be delivered in 2002 according to the Exhibit 3. And the iron ore shipments are 445 million tons in 2002. Then, we can infer that the supply of dry bulk at the end of 2002 is:

612+（612-552）*(33/63)=643 (millions of tons)

|　 |2000 |2001E |2002E |2001~2002 |

|Iron ore vessel shipment |440 |436 |445 |2.06% |

|Fleet size |552 |612 |643 |5.14% |

According to the above sheet, the supply for dry bulk will increase by 5.14% in 2002, but the demand will only rise 2.06%. Therefore, we anticipate the spot charter hire rate...