UpdateEurope palm oil may rise on tanker hijack

20 August 2008 13:07  [Source: ICIS news]

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By Rachel Howat and Dan Horlock

 

LONDON (ICIS news)--The hijack of a tanker loaded with palm oil in the Gulf of Aden could push European prices up in the short term, market participants said on Wednesday.

 

"Palm oil is already tight in northwest Europe and this hijacking may create a little bit of a squeeze in the very prompt market, although any change in price would depend on demand for palm methyl ester (PME)," said one broker at Starsupply.

 

PME prices were currently assessed around $1,100/tonne FOB (free on board) ARA (Amsterdam, Rotterdam, Antwerp) T2 (customs, duty cleared), with market participants estimating the hijack would add a $50/tonne premium to very prompt product.

 

The MT Bunga Melati Dua, a 32,000 DWT (dead weight tonnes) tanker reportedly loaded with 15,000 tonnes of crude palm oil, was hijacked on Tuesday night by Somali pirates and was heading for the Somali coast, said the International Maritime Bureau (IMB).

 

The tanker, owned by the Malaysian International Shipping Corp (MISC), was en route from Sumatra in Indonesia to Rotterdam in the Netherlands with 39 crew when the hijack took place in the Gulf of Aden, between Somalia and Yemen.

 

Demand for PME, a form of biodiesel used mainly in warmer climates, is traditionally low in Europe going into the colder months due to the product’s high cold filter plugging point.

 

“It is unlikely that the hijacking will affect prices going into the future," added a trader at a leading ethanol and biofuels company.

 

NATO warships were tracking the vessel and no ransom demand had yet been received, said the IMB.

 

Somalia has no central government and armed militias are often involved in supporting piracy in what is regarded as one of the most dangerous stretches of water in the world. This is the latest in a wave of attacks in the region.

 

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By: Rachel Howat
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