Ample palm oil tonnage on weak Asian demand

SINGAPORE (ICIS news)--Tonnage availability for palm oil remains high as demand from Asian buyers such as China and India continues to be weak, shipping industry sources said on Friday.

“Demand for palm oil remains subdued as Chinese buyers have covered their April nominations. We do not expect them to be in a hurry seeking to fix their May requirements soon,” a broker said. Even if they should come out to fix anything, rates were expected to be much softer, he added.

“Demand for tonnage from Indian and Pakistan were also subdued as they have also covered most of their April nominations,” another source said.  

As a result, freight rates had weakened much over the past two weeks.

Freight rates for 10,000-15,000-tonne palm oil cargoes from the Straits-east China fell by $6/tonne to $36-38/tonne, and fell $7/tonne to $39-41/tonne for the journey to north China since end-March. Rates for the voyage to south China softened by $4/tonne to $29-31/tonne.

Freight rates to the west coast India fell slightly by $2/tonne to $40-41/tonne and $33-34/tonne to the east coast of India for 12,000 tonne cargoes and Pakistan rates were also down $2/tonne to $40-41/tonne. 

“We will expect these rates to come off again over the next few weeks on the current weak buying interest from Asia,” another source noted.

There were talks that Chinese buyers who earlier defaulted on their purchases at record high prices had come to a consensus with suppliers however, exact details remained sketchy.

“There are still many vessels, at least five of them waiting in the Straits to load any cargoes, even for prompt periods,” said a source, which showed how weak the demand for tonnage was.

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