Vegetable oils freight rate hikes fail to appear

02 July 2007 17:30  [Source: ICIS news]

LONDON (ICIS news)--An expected surge in freight rates on vegetable oils due to new shipping regulations has failed to materialise and has even reversed on the Asia to Europe route, brokers said on Monday.

 

“Shipowners expected rates in the Asia/Europe trades to rise by 40-50% this year as a result of the new IMO regulations, but rates have not reached expectations,” one broker told ICIS news.

 

New regulations requiring vegetable oils to be transported in double hulled tankers were introduced by the International Maritime Organization (IMO) in January this year.

 

Shipowners expected demand caused by the new regulations, which ruled out the use of single hulled tankers, to push up rates significantly but brokers say this has not happened.

 

Another broker said rates on the Asia/Europe trades had been “eroded” since the beginning of the year. He said that a 35,000 tonne load would have fetched $60/tonne (€44/tonne) earlier in the year, but that was now down to $50/tonne.

 

The source said there were also other reasons for the decline, including an increase in the cost of palm oil from southeast Asia which led to a fall in demand for the product.

 

Last week crude palm oil (CPO) prices fell by $12/tonne to $670/tonne FOB (free on board) southeast Asia from the previous week, according to global chemical market intelligence service ICIS pricing.

 

In early May CPO prices hit an eight-year high of $700/tonne, pricing some biodiesel producers out of the market. Consequently some manufacturers in Malaysia and Indonesia shutdown production.

 

($1 = €0.74)

 

By: Nick Savvides
+44 20 8652 3214

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