Palm oil freight rates low on weak Asian demand

22 May 2008 05:00  [Source: ICIS news]

Singapore (ICIS news)--Palm oil freight rates remain depressed as demand from Asian buyers for the commodity is still not forthcoming, industry sources said on Thursday.

 

“Demand is just not there. The Chinese are not coming out for their June nominations as they still have ample supplies. Buyers have also been shying away from high offers,” a source lamented.

 

Even the Indians are not buying on a spot basis as they have turned to purchases via buy tenders, he added.

 

A stream of empty vessels, waiting to load cargoes were seen waiting in the Straits. We are seeing at least 10 vessels, another source noted.

 

With crude prices shooting through the roof and bunker prices following suit, shipowners are under pressure to increase freight rates, but they cannot do so as charterers are not willing to pay, a broker lamented. Business is really bad, he added.

 

U.S. crude oil futures surged to a fresh record high above $135.00/barrel on Thursday as a weaker dollar and dips in U.S. crude oil inventories triggered buying.

 

Singapore bunker 380-CST fuel oil on late Wednesday hit $613.00/tonne.

 

Shipowners are now just trying to minimize their losses by berthing their empty vessels. Even if they could fill their vessels, they will be losing money, another broker said.

 

Freight rates in Asia had been holding steady since early May.

 

This week, palm oil freight rates for 10,000-15,000 tonne cargoes from the Straits-mid China remained unchanged at $35-36/tonne and $38-39/tonne for the journey to North China since end-March. Rates for the voyage to South China held steady $29-31/tonne over the same period.

 

Freight rates to west coast India dropped slightly by $1/tonne to $38-39/tonne, but remained at $33-34/tonne to the east coast of India for 12,000 tonne cargoes. Pakistan rates were also down $1/tonne to $38-39/tonne.

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By: Desmond Chia
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