Freight weekly report

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---------------------- Forwarded by Jeffrey A Shankman/HOU/ECT on 10/10/2000
08:59 AM ---------------------------

Enron Capital & Trade Resources Corp. - Europe

From: Chris Connelly 10/08/2000 01:55 PM

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
Subject: Freight weekly report

Enron Shipping Services Weekly report 39/2000

Highlight
Had a meeting with Bocimar in our offices this week as they were interested
in knowing our plans with ABC. From meeting it became very clear that they
were out of the running for ABC as they were unwilling to purchase that
company without a significant discount to current market levels. Few days
later, met with CEO of ABC as he had just received a bid from a rival
shipping company ( Zodiac ) and he was basically begging us to join the
bidding as he really did not want his company to fall in the hands of
Zodiac. Pierre and I continued to express our interest in ABC but told him
that we needed more time to evaluate their assets and could not counter on
such short notice. Told ABC that we would continue to follow with interest
and that if buy out by Zodiac failed, we would come back to discuss. Our
goal all along was to make sure that Bocimar were not going to get their
hands on ABC or they would have effectively controlled 50 % of the spot cape
fleet and made our short position into next year look worrisome. Having
shown interest we not only were kept well advised as to what Bocimar was up
to but it could have reacted quickly to protect our position. We are
relatively pleased with the potential of Zodiac buying ABC.

Also, this week we fixed another Coeclerici cape for period. We fixed the
cape Asia build in 1990 for minimum 4-6 months to allow us to use the vessel
to load out of Australia for CLP in December and hedge ourselves against a
late winter surge in cape rates but we have the added advantage of having an
option for a further two years to be declared mid January 2001. We bought
ourselves a very cheap call option with an exercise date in three months time
in a very volatile market. Further, Coeclerici gave us a put in year two to
cap our downside and gave us a call option to extend the deal into an
additional third year . We are currently discussing with Bocimar the idea of
putting that cape into their pool if they secure us a floor for year one and
a share in any upside. Will keep you posted !!!

Fixed a 6 panamax contract as vessel owner with National power from South
Africa to Bristol with option Immingham to give us a very useful short
position into next year in the panamax sector. This deal will add to our
already significant business in South Africa for next year and will allow us
to arbitrage between cape and panamax vessels as we hold contracts in both
sectors.

Furthermore, Intercore has asked us to offer them 6 capes from Bolivar into
ARA from next March till September which if we were to win the contract would
make us a definite market maker in the two busiest coal routes ( RBCT/ARA and
COLOMBIA/ARA ).

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

Panamax : Market continues to fall for balance of the year as China/Asia was
on holiday this week and fixings were relatively few
Capes : Market is steady but few expect a fall in rates for balance of 2000.
Owners and charterers waiting for coal trans to fix for next year.

Deals Done
Physical Freight
ECS freight
Fixed 2+1 geared panamaxes from Indo to Hong Kong for November to January
2001 at $6.35.
Agreed window of 12-21 November with MOSK for Drummond-Redcar lifting
Fixed a panamax for late October loading from Drummond to LBT at $9.80 with
Bell ships
Sold a cape to the coal desk from Bolivar to Rotterdam at $6.85 for q3 next
year

Third parties freight deals
As mentioned above structuring a deal with Coeclerici and Bocimar
Fixed 6 panamaxes from RBCT to UK ports for National Power for all of 2001 at
around $10
Trying to sell 4 capes to Billiton from RBCT to Rotterdam and again buying
same deal with Coeclerici as a back to back with some profit.

OTC
FFA s
No trades

EOL
No trades this week but EOL trader joining our group Thursday and new routes
to be added shortly which should add liquidity and new players.

Miscellaneous
Our position as it stands now is short about 350,000 tons for balance of 2000
mostly attributed to our November/December Colombia/LBT panamax short. For
cal 01 we are 6.2 million tons short and cal 02 1.7 million short and cal 03
about 400,000 tons short. These figures do not take into account our two
Coeclerici cape deals as those have not been finalised with counterparty and
have not been booked as of yet

Travels
Pierre is in Asia all week and I am in the office