Asia prompt freight rates seen flat despite firmer fuel prices

08 April 2011 10:24  [Source: ICIS news]

SINGAPORE (ICIS)--Freights for the prompt shipment of chemicals in Asia have remained flat amid strong resistance from charterers, despite the sharp spikes in fuel oil prices seen this week, a petroleum tanker operator said on Friday.

Asian fuel oil prices rose by $40-50/tonne (€28-35/tonne) this week on the back of firmer crude futures, with 180 centistoke (cst) at $688.00-688.25/tonne FOB (free on board) Singapore and the heavier 380-cst grade at $675.50-676.00/tonne FOB Singapore, ICIS data showed.

In addition, arbitrage supplies from the West are expected to be tight from May onwards because of some refinery shutdowns in Europe, industry sources said.

The increase in operating costs is further eroding freight margins as shipowners are finding it difficult to levy a fuel surcharge for prompt shipments, said a shipbroker.

“We have tried raising freights by $5-10/tonne to offset the higher bunker fuel costs for prompt shipping enquiries, but we are facing resistance from the charterers,” said the tanker operator.

“For spot shipments, some of our charterers are paying 5-10% more for freight to help us cope with the increased operating costs,” said a Japanese shipowner.

“However, not all charterers understand our difficulties,” added the shipowner.  

Meanwhile, most chemical tanker operators told ICIS that short-term measures such as the minimal bunkering of ships were not feasible, but they are now placing a stronger emphasis on operational efficiency.

“We are watching fuel oil prices very closely and are in discussions with our ship managers to optimise operating costs,” said a chemical shipowner based in Singapore.

Additional reporting by Felicia Loo

($1 = €0.70)

By: Lester Teo

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