Freight weekly report

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---------------------- Forwarded by Jeffrey A Shankman/HOU/ECT on 11/28/2000
09:10 AM ---------------------------

Enron Capital & Trade Resources Corp. - Europe

From: Chris Connelly 11/27/2000 01:49 AM

To: George McClellan/HOU/ECT@ECT, Stuart Staley/LON/ECT@ECT, Jeffrey A
Shankman/HOU/ECT@ECT, Mike McConnell/HOU/ECT@ECT, Kevin
McGowan/Corp/Enron@ENRON, Tom Mcquade/HOU/ECT@ECT
cc: Peter Bradley/LON/ECT@ECT, Jez Peters/LON/ECT@ECT, Candace
Parker/LON/ECT@ECT, Kenny Nicoll/LON/ECT@ECT, Dimitri Taylor/LON/ECT@ECT,
Andy James/EU/Enron@Enron, Cornelia Luptowitsch/LON/ECT@ECT
Subject: Freight weekly report

Enron Shipping Services Weekly report 46/2000

Highlight

The panamax market has fallen about $1,000 over the last two weeks on basis
of time charter rates. For next year, owners have turned on average quite
bearish and several are calling us directly to offer us their vessels at
discounted numbers. Interestingly, cape vessel owners have been watching the
falling panamax market with trepidation. Currently, the spread between the
two sectors is about $13,000. Over the last three days, time charter rates
for cape size vessel for 12 months starting in January 2001 have dropped by
approximately $1200 and brokers attribute the rapid decline to the
unsustainable spread between the two vessel types.

Of significant interest this week, Bocimar called us to price put options for
them. They told us that they wanted some protection for next year but could
not buy puts or sell swaps in the market place for fear of creating a panic
selling mode from owners. We offered them some prices which they told us
were too expensive but we are still in discussion. Our problem is that we do
not want to diminish our short position for next year so in offering put
options to Bocimar, we also want to keep selling the underlying - and that
might be challenging as the market is very illiquid and there are not too
many bids for next year at good selling numbers.

We are currently continuing to build a short position on panamaxes and are
offering rates to AK Steel from Brazil to US gulf for their iron ore
contracts and also offering Sidmar ( the Belgian steel mill ) some rates from
Brazil into Gent. We might join forces with Coeclerici on several of these
tenders to mitigate the risk and also to share market information.

last but not least, we are studying the idea of taking a cape new building
delivery 2003/2004 on time charter for 8 years with ability to extend for
three additional years and the ability to buy the vessel after year three in
Japanese yen. The time charter rate is very attractive when compared to the
average time charter rate of this size vessel over the last 5 and 10 years.
Will keep you posted.

Market
Short term Medium term Long Term
Handy Max Flat Flat Flat
Panamax Down Down Down
Cape Size Flat Down Down

Deals Done
Physical Freight
ECS freight
Sold three capes from Queensland to Romania ( Subject counterparty credit )

Third parties freight deals
Sold 3 capes to BHP from Brazil to Indonesia ( Will know if we won the tender
tomorrow )

OTC
FFA s
Numerous swaps on both the Cape and Panamax routes

EOL
Traded 54,000 tons of Panamax US Gulf/Japan with Louis Dreyfus

Travels
All three of us should be in all week