31/05/2023 (Fast Markets) -  Palm oil freight rates were steady to higher this week, with more inquiries for second-half June shipments amid tighter vessel availability, keeping rates supported.

Freight for 18,000-20,000 tonnes vessels from Southeast Asia to West Coast India was holding steady at $40-42 per tonne, unchanged from a week ago, while freight rates to East Coast India for 10,000-12,000 tonnes shipments were around $34-36 per tonne.

“There have been a number of inquiries for vessels to India for the second half of June, but availability of full ships is tight now as there was a glut of end-May cargoes and prompt space was taken up,” a regional shipbroker told Fastmarkets Agriculture.

“Those vessels are still on the way to India and are unable to make it back for the second half of June,” the shipbroker added.

Buying interest from India for June and July-September volumes has picked up more in the last few weeks, with palm’s discount against other rival soft oils widening compared to the spread seen in March-April.

Chinese freight rates

Meanwhile, freight to China rose on the back of increased inquiries for June shipments, with rates for 12,000-15,000 tonnes shipments from Southeast Asia to China at $35-45 per tonne, higher from $32-42 per tonne a week ago.

Similar to India, buying interest for June cargoes from the second largest palm oil importer has also picked up in recent weeks, with approximately 14-15 cargoes heard traded in the last two weeks for June shipment.

“We’re still looking for vessels at the moment for June; the challenge is because there are also fewer vessels available which meet China’s strict requirements for shipping olein,” one trader with dealings to China said.

For vessels carrying edible oil into China, the ship’s last three cargoes are also required to be of edible grade to reduce any risk of contamination.

This is on top of additional specifications and standards imposed by the Inspection and Quarantine authority (CIQ) for edible oil imports into the country.

Buying has also been more active for June shipments following earlier expectations that Indonesia will lower its reference price and effectively its export taxes for CPO for the June 1-15 period from the previous $169 per tonne to $118 per tonne, with taxes for other palm oil products also lowered, thereby making Indonesian products cheaper.

The official circular denoting the change was issued on May 30.

https://www.fastmarkets.com/insights/palm-oil-freight-rates-stable