Middle East freights rates to fall in H2 Dec on tonnage oversupply

07 December 2010 05:01  [Source: ICIS news]

SINGAPORE (ICIS)--Freight rates from the Middle East to Asia are expected to fall in the second half of December as a result of tonnage oversupply amid several plant turnarounds, industry sources said on Tuesday.

The availability of spot tonnage in the Middle East has out-stripped spot shipping enquiries, as various petrochemical plants in the Middle East were shut for maintenance, industry sources said.

“We are now receiving fewer spot shipping enquiries for second half December-loading spot cargoes from the Middle East, said some chemical tanker operators.

A regional chemical tanker operator had quoted freight rates for 10,000 tonnes of easy chemicals from the Middle East to northeast (NE) Asia at the low-to-mid $40s/tonne, down by $4-5/tonne (€3-3.75/tonne), from the mid-to-high $40/tonne levels seen in November, chemical tanker owners said.

Spot freight rates vary slightly from carrier to carrier, depending on the balance tonnage for spot shipments after contract of affreightment (COA) cargoes have been booked and the availability of tramp tonnage - which is traded solely on a spot basis - had been taken into consideration.

The current oversupply of spot tonnage was also bolstered by the arrival of tankers at the west coast of India, which had loaded their end-November palm oil shipments from southeast Asia, according to industry players.

Those chemical tanker operators would usually re-position their ships in the Middle East, if there was a lack of interim cargoes from India into the Middle East.

However, most tanker operators said the drop in freight rates was cyclical and it was unlikely to persist beyond the first half of January 2011.

Meanwhile, industry players told ICIS they were expecting a clearer picture to emerge early next year when contract charterers would announce their cargo forecasts for January 2011 loading and spot enquiries that had spilled over from their COA cargoes.

($1 = €0.75)

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By: Lester Teo

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