04 June 2010 08:53 [Source: ICIS news]
SINGAPORE (ICIS news)--Ocean freight rates on the key northeast Asian sector in the first half of June remained under pressure amid poor spot chemical demand from China and ample space on vessels, shipbrokers and charterers said on Friday.
There was plenty of vessel space for prompt loading available from South Korea to China with very few enquiries, which kept freight rates depressed, a South Korea-based ship broker said.
Commodity prices had been falling and chemical inventories in China were extremely high and as a result there were not many cargoes looking for vessels, another major regional shipbroker added.
A 3,000-tonne easy chemical cargo of BTX from Korea to mid-China, or ports in eastern China, which would fetch more than $20/tonne (€16.4/tonne) in May would now be agreed by vessel owners at $19/tonne, brokers said. For a 5,000-tonne aromatics cargo, the freight rates on this trade route were around $15/tonne.
For several types of chemicals, inventories in China were at record highs that resulted in depressed demand in June.
Methanol traders in China estimated that the country’s inventories were around 700,000-750,000 tonnes - a large amount that caused a big drop in prices and kept buyers away.
Similarly, regional sources estimated that China’s toluene inventories were around 225,000 tonnes, more than twice of the country’s usual requirement.
The stock levels for other chemicals including MEG and solvent xylene in China were also extremely high keeping spot business thin, regional buyers and sellers said.
Recently, Chinese flag vessels were plying domestic routes rather than overseas amid the weak demand scenario, a Singapore-based shipping agent said.
"We are hoping that there will be more business late in June and it will improve in July," said a Korean shipping agent.
Until then, prospects for the shipping industry in June remain bleak, he added.
($1 = €0.82)
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