15 January, 2002 (Business Times) - BIG ships are still unable to collectcrude palm oil from Belawan port in Indonesia, forcing some vessels todivert to Malaysia as efforts to remove a sinking dredger move at a snail’s pace, traders said yesterday.

Officials in Belawan in North Sumatra — Indonesia’s biggest palm oil andrubber producing area — had expected to see traffic returning to normallast weekend, but traders said there was no improvement. The port has beenblocked for more than a week.

“Ships whose draught is more than eight metres can’t enter the port.Belawan is not normal yet and between five and 10 vessels were diverted toPasir Gudang last week,” said one trader in Kuala Lumpur, referring to oneof Malaysia’s main ports.

“Those vessels have no choice but to go to Malaysia to get oil becausethey can’t get anything from Indonesia,” he added.

Traders said in normal situations Belawan, which is Sumatra’s main exportport, could accommodate big ships whose draught is around 10.5 metres. Thesinking dredger is blocking the port entrance and workers are now workingto deepen the channel.

“The dredger is still there. Hopefully, things will return to normal,”said one Belawan port official who gave no further details.

Palm oil is normally transported by big ships, whose capacity is between15,000 and 30,000 tonnes, from Indonesia to various destinations such asChina, India and Europe.

Disruptions in Belawan have angered traders in the world’s second largestproducer after Malaysia as tonnes of palm oil failed to be delivered tobuyers.

Port officials said high seas have hampered efforts to remove the dredger.

Some traders said the Indonesian state shipping company had just announcedthat passenger ships bound for Jakarta could only leave Belawan duringhigh tide in the evening, which showed there was no improvement at theport.

“You may be able to enter the port. But what’s the point if you can’tleave Belawan after you finish loading the cargo?” asked one trader inSingapore.

Traders said the problem in Belawan was a blessing for the Malaysianmarket because this would boost exports in January.

“Some buyers are now shifting to Malaysia because they don’t want to takeany risk.

That’s why what’s happening in Belawan is positive for Malaysia,” said onetrader in Surabaya, the capital of East Java.

Traders in Kuala Lumpur said Malaysia’s palm oil exports were estimated toreach more than one million tonnes in January from an expected 950,000tonnes because buyers would shift to Malaysia.

Some traders said it was true that Belawan was digging a new channel, butit would not be able to accommodate big vessels and thus could furtheraffect shipments.

“What I understand is that as of yesterday, things haven’t returned tonormal in Belawan. Only smaller ships whose draught is below 8 metres canenter the port,” said one trader.

Traders in Malaysia said good exports and declining production would cutend-month stocks in the coming months and boost prices.

Private forecaster Ivan Wong forecast end-January stocks to reach1.11-1.12 million tonnes, down from the official 1.21 million tonnes inDecember.

By midday yesterday, the benchmark third-month March contract in Malaysia’s crude palm oil futures market was down RM15 at RM1,210 a tonne due to atechnical correction. Volume was moderate at 1,507 lots. — Reuters