NE Asia ship owners wait seasonal tonnage demand rise in winter

SINGAPORE (ICIS)–Northeast (NE) Asia’s ship owners are waiting for a seasonal pickup in spot tonnage demand with the advent of winter but so far the increase since the last week of October is limited, shipping sources said on Thursday.

Historically, China’s demand for chemical products increases during the winter season as buyers tend to stockpile ahead of the year end closing of books and Chinese New Year production, according to a shipbroker.

Subsequently, freight rates trend higher during winter as owners hike offers on the back of volatile weather patterns and improved demand.

Winter weather could bring about storms, ice and fog which would affect the vessel speed and utilization, resulting in ship delays.

Charterers returned to the spot market seeking vessels for November loading, helping support freight rates.

However, with declining bunker costs, most charterers were unwilling to meet owners’ higher offer, insisting on fixing at “last done” freight rates.

“Bunker cost has been falling, following crude oil prices. Owners are actually making higher profits with last done rates as their operating costs is declining,” said a northeast Asian charterers.

Despite the increased in spot enquiries seen for November, owners expressed disappointment in the year-on-year decline in fixing activity.

“We were waiting for the freight boost that comes with the winter tanker market. It is sorely needed after months of limited movements but we are not seeing much of it this year. Last year, the market was hot,” said a northeast Asian ship owner.

A southeast Asian ship owner said: “The winter tanker market should be in full swing by now but its barely started. Its shaping up to be a late spike this year or so we hope.”

According to shipping sources, the weak Chinese economy had affected the buying requirements for petrochemical and finished products, resulting in the slowdown in spot shipping activity seen.