By Stelios Kollintzas, Tanker Broker
The news from the edible oil markets are being dominated by Covid 19 effects ,export disruptions, and record high prices that shape the cargo flows.
Sunflower oil exports and production from South America have been halted during June, as Argentinian custom workers went on strike demanding priority access to Covid-19 vaccines. But this is not the greatest issue Argentina has to face. Parana river, whose 5km length gives way to a large part of grain crop harvest from Brazil, Paraguay and Argentina is experiencing historic low water levels that affect navigability and loading capacity of vessels. I freight terms, this could not be good news. Ample tonnage is still available to cover lower exports and CPP market is not backing Owners.
Represenative freight rates:
30/32000mts ARGENTINA / INDIA US$43/44 PMT
40/42000T ARGENTINA+BRASIL/INDIA 2/2 $40/42 PMT
25/30000T ARGENTINA/EAST MED 1/1 $31/33 PMT
ARGENTINA/WEST MED 25/30000T 1/1 $32/34 PMT
Sunflower oil exports from Black Sea have seen a year to date decrease of about 10% and likely to sustain the drop till season end in September. This is mainly due to disruptions in harvest productions coupled with increased demand for biodiesel fueling vegetable oil prices to 10 year highs in May. India, the world’s top importer of vegetable oils, severely suffering from Covid-19 , has been using its stocks of sunflower oil in an effort to reduce spending on imports. However, stocks are already low and domestic production is failing to keep pace with demand. India will eventually have to increase imports. Shipping wise, India’s Covid recovery and return in imports is good news.
Crude Palm oil prices have also seen a more than 100% increase, hugely affecting spending on the Country’s importing. However, due to higher spread between the soft oil , imports year to date were up about 40%. Moreover, in an effort to relieve its people, government has recently eased the import tax on refined palm oil hoping of increased flows and cheaper oil for consumers. In Europe, sustainability disagreements and curbs placed by EU are on the table for re-examination by WTO. Positive results are anticipated by the industry in hope of support on exports from Malaysia and Indonesia. Though, there has been a steady volume of shipments to India and Europe., freight rates have been softening among the relevant CPP markets .Both regional and long-haul routes are moving sideways or softening.
Representative freight rates loading from South East Asia :
E.C. India 12-15,000 MTS 39.00 usd/pmt
W.C. India/Pakistan 12-15,000 MTS 31.00-32.00 usd/pmt
Mid China 12-15,000 MTS 30.00 usd/pmt
Rotterdam (imo3) 2/1 40/42,000 MTS 3 40-42
T/C Del Korea-Re-del Cont. 47-51,000 DWT 12,000/13,000 PD
If all-time high prices in soft oils are sustained, consumer and industrial consumption will likely be affected. Consumers might change food habits and manufacturers look into cheaper products. This will subsequently alter trade and shipping volumes respectively.
Chartering (Wet: Softer / Dry: Firmer)
The Capesize market correction was not a surprise last week with BCI losing 477 points w-o-w. On the other hand, Panamax rates continued their upward rally (average earnings increased by %17.2 w-o-w) with geared sizes following suit albeit at a slower pace. The BDI today (06/07/2021) closed at 3,179 down by 239 points compared to previous Tuesday’s (29/06/2021) levels. The previous week’s hopes for a positive turnaround were short-lived. The crude carrier market displayed soft activity last week, with discounts on rates materializing across all business routes. The BDTI today (06/07/2021) closed at 591, a decrease of 14 points, and the BCTI at 447, a decrease of 2 points compared to previous Tuesday’s (29/06/2021) levels.
Sale & Purchase (Wet: Firmer / Dry: Stable+)
Dry bulk and Container units continued to monopolize owners’ interest last week. On the dry bulk sector, geared sizes have attracted most of the interest while there was an increase of crude carriers deals albeit in low numbers for another week. In the tanker sector, we had the sale of the “PHOENIX M” (307,151dwt-blt ‘99, S. Korea), which was sold to Thai owner, Nathalin Shipping, for an undisclosed price. On the dry bulker side sector, we had the sale of the “DOUBLE PROVIDENCE” (95,720dwt-blt ‘12, Japan), which was sold to Greek buyers, for a price in the region of $21.3m.
Newbuilding (Wet: Stable- / Dry: Stable-)
The newbuilding market activity remains healthy for another week, with the owner’s interest focusing on the Container sector followed by a strong appetite for LNG units last week. Tanker and bulker units were the minority among the recent newbuilding orders, while no crude carrier contracts were materialized during the previous days. On the clean tanker side sector, Proman Shipping announced two more methanol-fuelled MR units, bringing its total orderbook to six vessels. The newest product carriers will be constructed at GSI shipyard. At the same time, two Kamsarmax units were ordered by Aston at Chengxi for $31.5 million each while the same yard secured 2x70,000dwt and 6x64,000dwt woodchip carriers from BoCom FL. On the Container front, a total of eleven feeder boxships were ordered with the interest spreading at South Korean and Chinese yards from Chinese, Greek and Danish owners. Lastly, Danish owner Celsius Shipping inked a deal for three LNG units at Samsung for a price of $193.0 million each while H-Line and CSSC ordered one 174.000cbm unit each at Hyundai Samho and Hudong Zhonghua respectively.
Demolition (Wet: Firmer / Dry: Firmer)
Scrap prices across the Indian-subcontinent markets remained at high levels for another week, with Bangladeshi and Pakistani breakers even increasing their offers amid a further supply slowdown of vintage candidates. This improvement has been supported also by the increasing steel plate prices in both countries. At the same time, Delta mutation spread has led the Government of Bangladesh to impose 7-day nationwide restrictions, yet with port operations in service during that period of time. In India, steel plate prices decreased w-o-w, while a slowdown in buyers’ appetite has been witnessed during the previous days. The Turkish demolition market outlook remained unchanged with both imported and local steel plate prices steady w-o-w and with the Turkish Lira recouping some of its lost ground during the previous week; it is trading at the 8.67 per dollar mark at the time of writing.
Please click here to open Intermodal's Weekly Market Report for the week 26,2021