Palm oil freight rates fall on weak Asia demand

25 April 2008 08:20  [Source: ICIS news]

SINGAPORE (ICIS news)--Palm oil freight rates continue to fall as demand from Asian buyers remains weak, industry sources said on Friday.

"We are not seeing any enquiries nor any fixtures for May," a broker said. "We have been trying very hard to clinch any business for the past week, but there is just no interest from any of the Chinese buyers."

"Fundamentally, there is not much demand for palm oil. So, I don’t really understand why palm oil prices are still at such high levels," another source said.

"Demand for tonnage from Indian and Pakistan were also subdued as they have also covered most of their April nominations. They are also not looking to cover their May nominations any sooner," he added. 

Freight rates had weakened considerably since the end of last month. This week, rates for 10,000-15,000 tonne cargoes from the Straits-mid China fell by $7-8/tonne to $35-36/tonne and $8-9/tonne to $38-39/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 over the same period.

Freight rates to the west coast of India also dropped by $2/tonne to $40-41/tonne and $2-3/tonne to $33-34/tonne to the east coast of India for 12,000 tonne cargoes while Pakistan rates were down $5/tonne to $40-41/tonne. 

"We are still seeing many empty vessels waiting in the Straits for spot cargoes to be loaded," sources added.

Higher bunker oil prices were exacerbating the situation. "Shipowners cannot raise freight rates although bunker oil prices are at such high levels on record crude prices. This is really going to bad," a source said.

Crude prices fell to $116/barrel levels in the US on a strong dollar late Thursday. Crude futures prices in the US surpassed the $117/barrel mark this week and tested the $120/barrel level.

By: Desmond Chia
+65 6780 4359

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