Palm oil freight rates down on weak Asian demand
04 April 2008 05:11 [Source: ICIS news]
SINGAPORE (ICIS news)--Freight rates for palm oil tankers have fallen sharply due to weak demand for crude palm oil (CPO), industry sources said on Friday.
This week, CPO freight rates for 10,000-15,000 tonne cargoes from the Straits-mid China fell by $6/tonne to $36-38/tonne from last week while those for the journey to north China were down $7/tonne to $39-41/tonne. Rates for the voyage to south China softened by $4/tonne to $29-31/tonne.
Freight rates to west coast India also softened slightly by $1/tonne to $41-42/tonne and down $1-2/tonne to $34-35/tonne to the east coast of India for 12,000 tonne cargoes. Rates to Pakistan were down $1/tonne to $41-42/tonne.
Chinese buyers reportedly had covered their April CPO requirements, which were estimated at around 700,000 tonnes. However, the recent plunge in CPO prices from record highs had led to some defaults by Chinese buyers who had made their purchases at very high prices, brokers said, but this could not be confirmed with the buyers.
CPO prices on Bursa Malaysia soared to over ringgit (M$) 4,000/tonne ($1,254/tonne) in early March, but have fallen back to M$3,285/tonne on Thursday.
The hike of export taxes for CPO by the Indonesian government from 10% to 20% had also discouraged major players from exporting and capped vessel demand, sources added.
The unexpected soft demand from Indian buyers added further to tanker owners’ woes.
Industry players had anticipated a surge in demand from Indian end-users after the Indian government had reduced import taxes for crude products from 20% to 0% this week. Import taxes had earlier been reduced from 45% to 20% in a bid to tackle inflation in late March.
"The reactions from Indian buyers were mixed. On the one hand, the cut in taxes should stir buying interest for CPO. On the other hand, they wanted to wait for CPO prices to drop further," said a disappointed shipping source.
Demand for CPO from Pakistan remained muted as April nominations had been mostly covered.
A number of empty vessels were reportedly waiting to load available spot cargoes in the Straits and Merak. A source noted that one could get any vessels ranging from 3,000 to 18,000 tonne.
"This is how bad it is now!" he added.
($1=M$3.19)
ICIS Copyright © Reed Business Information 2009
Author: Desmond Chia+65 6780 4359
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