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---------------------- Forwarded by Jeffrey A Shankman/HOU/ECT on 10/23/2000 08:17 AM --------------------------- Enron Capital & Trade Resources Corp. - Europe From: Chris Connelly 10/22/2000 07:02 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 Subject: Freight weekly report Enron Shipping Services Weekly report 41/2000 Highlight The freight market keeps inching upwards, with a consensus that the freight market will have some upward momentum until early next year, when it is expected that the steel makers will significantly reduce their raw material imports and reduce their freight requirements. We are still trying to conclude our two structured deals with Coeclerici, but have run into problems as counterpart is not keen on agreeing our credit terms. We are meeting with Coeclerici during Coaltrans to try and sort out a compromise and will also try to get our credit department to be more flexible with our terms as we need to adapt our terms to the shipping industry or face the possibility that no one will want to transact on our strict terms. This week the liquids group launched their tanker route on EOL and asked Andy ( our EOL freight trader ) to manage it full time. Within the first two days, 400,000 tons had been traded. We have tendered for a contract covering two years to ship iron ore from Basil to Saudi Arabia starting in Jan next year for the account of Hadeed. If we were to win the contract, it would fit very well with our short position out of Richards Bay as it would allow us to fix a vessel on time charter from Europe to Brasil, then go to Saudi arabia to discharge and then continue onto Richards bay to load coal. The net result of having the hadeed contract would be to save 15 days ballast sailing which in terms of dollars would equate to $250.000 saving per trip Market Short term Medium term Long Term Handy Max Up Flat Flat Panamax Up Down Down Cape Size Up Up Flat Deals Done Physical Freight ECS freight Fixed a panamax for early November loading from Puerto bolivar to Immingham Third parties freight deals Fixed a cape for late november loading out of RBCT to Rotterdam at $11.17 for Preag. OTC FFA s Bought a Us gulf/Japan contract for November from Conagra and a 4 TC contract from Andre for Q4 & Q1 01. Our view is that the panamax market will rise in the short term and we are therefore going long with the intention of selling our lenght in a couple weeks and then build a significant panamax short position for next year when we expect a massive correction. EOL Traded 75,000 tons with Bocimar Travels Pierre, andy and myself are in Madrid until Wednseday meeting with several key customers
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