Under pressure: Market of vegetable oil sea shipping

27.07.2016

The market of vegetable oils sea shipping is pressured by a number of factors. Adverse weather conditions and low demand have caused reduction of vegetable oils transportation cost.

According to information agency “Intermodal Shipbrokers Co”, dry weather conditions caused by development of a natural phenomenon El Niño limited supply of palm oil from Malaysia and Indonesia.

Besides, this year substantial growth of demand for vegetable oils before and after Ramadan was not observed. For instance, India and Pakistan, the main demand drivers, did not increase vegetable oils purchases during May-July, while demand from China and Europe remained stable. Some growth of demand for oils from the Middle East countries was observed, but it was not enough to cover the excess tonnage in the market.

In South American basin some influx of tonnage is observed due to increased imports of palm oil to Argentina. However, long-lasting delays while waiting for unloading have led to imbalance of fleet offers and level of freight rates.

According to experts of Intermodal Shipbrokers Co, trading activity in the Black Sea region is not high. At the same time, there is a persistent demand for tankers which comply with FOSFA norms. Despite low demand in this segment rates remain high – transportation of 12 KMT of oil on the route Black Sea Region/Mediterranean - India is estimated at USD 55-57/MT.

More information on freight market is available to subscribers for weekly market report "Black Sea Grain & Oil" by UkrAgroConsult.

 

 

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