Although a specialized market in itself, the edible oil market could provide some relief to the lingering issues that the product tanker market has stumbled into, since the start the year. However, according to the latest weekly report from shipbroker Intermodal, the edible oil markets around the world remain in the doldrums, with low demand of tonnage in the regional South East Asia market and the deep sea trade and a slightly steadier pace of activity in South American and the Black Sea market.
According to Intermodal’s tanker chartering department and more particularly, Mr. Stelios Kollintzas, “although volume to India were slightly advanced during the last weeks in view of the Ramadan, which starts this June, freight levels have remained steady. Ample tonnage halted any improvement on rates, and owners are still waiting to take advantage of the seasonal boost in demand for edible oil”. He added that “the outlook on the long haul MR market is similar, if not worst. Whilst last month non-eco-ships could earn up to USD 17K per day and eco ships USD 19K, numbers have fallen to USD 16k and USD 18k respectively. On the FOSFA and NB vessels the outlook is slightly better, since the list is shorter and owners could be in the position to earn something extra”.
On a more positive note, “the Black Sea market has so far seen no impact arising from the political unrest in Ukraine, however, the situation is still of great concern amongst the shipping community. Rates in the Black Sea have been fairly stable with long haul cargoes to India, China and Iran being quickly covered, especially on the larger parcels of 25,000mts – 35,000mts. The best earners in this range are the CIQ candidates, where the list is tighter. Smaller shipments on the Black Sea to Med and Continent are showing significant activity, steady rates and good tonnage/cargo balance”, Kollintzas said.
He added that “delays in South America are still making the life of traders difficult, forcing charterers to work on extended laycans or ending up working on replacement tonnage. Overall the region shows a positive pulse with stable activity and a fair number of outstanding enquiries in the market to India and less for Korea and China. Freight rates to India from Upriver Argentina and Brazil to West Coast or East Coast India are in the USD 48-50pmt region basis 2:2 and 40,000mts quantity shipments, where WCI+ECI are on the USD 53-54pmt range. Finally, CIQ candidates to China could earn up to USD 64-66 on the ton. The South American market has also been an alternative option for several owners, who were looking to escape the prevailing poor CPP market in the Atlantic during the last weeks. Even with the addition of these vessels on the list, demand remained steady”, he said.
Concluding, Mr. Kollintzas noted that “as far as the near future of the edible oil market is concerned, one should be cautious in making any forecasts. While meteorologists express an increased chance of an “El-Nino’’ around June or July, we wait to see how the shipping market will react on the impacts of the weather phenomenon. “El-Nino” can induce drought in some parts of the world while drench in others. Malaysia and Indonesia, the two biggest exporters of Palm Oil, expect 10% – 20% decrease of output. Let’s hope that any effect on seaborne trade would be minor if the phenomenon occurs”.
Meanwhile, in the newbuilding market this week, prices seem to have stalled, as a result of a slow pace of ordering activity. According to Intermodal, “we are still looking at only a handful of orders being report on both the tankers and dry bulkers side, with a big chunk of them being exercised options rather than freshly inked deals. The course of the newbuilding market so far this year as well as since the beginning of the crisis has not allowed yards to enjoy long periods of sufficient business coming in, with the exception of last year. In this spirit, consolidation has been an unavoidable route for the industry and the recent announcement of another takeover in the Japanese front was no surprise. Namura Shipbuilding, probably one of the most financially sound Japanese yards, is taking over Sasebo Heavy Industries, in a deal that will result in the creation of the second largest shipbuilding group in the country and will allow Namura to better deal with increasing competition in the industry. We are set to see more similar deals going forward, as the degree of consolidation needed under the current market environment is certainly higher especially if the pace of activity remains at these levels for more a longer period. In terms of new orders, Japanese owner Santoku Senpaku has returned to Tsuneishi Zhoushan in Japan, to exercise options for a pair of eco design Kamsarmaxes (81,500dwt), set to be delivered between 2016 and 2017″, the shipbroker concluded.