Ship owners who are active in the specialized product tanker trades are finding out that demand has picked up considerably as of late. According to the latest weekly report from shipbroker Intermodal, “with most traders having returned to action from year end festivities, we have already seen signs of activity in the specialized product markets. Long-haul trades, – namely vegetable oil shipments from South America and the deep-sea MR market from Southeast Asia to Med/Continent – are increasingly active. On the other hand, the demand across the inter-regional palm oil trade lanes has weakened”.
Intermodal’s Stellios Kollintzas, who is operating the Specialized Products Desk for the shipbroker, noted that “the slow pace of enquiry to India and China for palm oils during the year end, has remained evident in the first days of 2015. A small number of cargoes in January and sporadic cargo enquiries already quoted for February, have resulted in increased availability of prompt tonnage and lower freight rates. The rates for Straits/WCI bss 10-12k shipments are between 29-31 usd/pmt and 27-29 usd/pmt bss 10-12k shipments to ECI. Analysts say that recent major floods in high-producing palm oil areas of Malaysia, the world’s second-largest grower, will take a toll on the country’s outputs and they are likely to fall further. As such, and in view of increased exports due to the upcoming Chinese New Year festivities, we expect the market to experience some activity with a positive effect on freight rates”, Kollintzas noted.
He added that “while many traders expected hire rates for long-haul MR trips to fall at the start of the year, the market has proved them wrong. The continuous delays in both newbuilding scheduled deliveries and ships discharging soft oils in India are the main factors that keep hire rate levels around 20,000-22,000 pd; with the higher rates being attributed to the ‘’ECO-MRs’’. It is true however, that with a 40-50% drop on bunker prices over the last months, the operational cost advantage is not so evident for the latter, as charterers might end-up with a cheaper solution when taking a ‘’normal MR’’ at a lower hire rate. Finally 33-40,000 shipments to Continent are still earning around low 60 usd/pmt and 55 usd/pmt on voyage bss”, Intermodal’s analyst said.
He went to mention that “overall, there has been a fair amount of activity out of South America for soya been oil exports during the start of the year. The driving forces behind this demand have been India and Europe while China has been almost obsolete. While the Atlantic CPP market is slightly cooling off, but still at healthy rates, there might be other ships apart from the non-CPP players and the older candidates that would look at veg oil out of South America. As such, this might give charterers, the opportunity to push rates back”.
According to Kollintzas, “the situation ex – Black Sea is similar. While the cross-Med CPP market has slightly softened, it is still far from poor and leaves owners with better earnings than a veg oil voyage. Despite increased activity towards all destinations, Westbound cargoes are preferable especially to ice-class candidates, as the ice-season has arrived; unless you are an Owner with older tonnage or have contractual commitments in the East. In any case, it seems that charterers will not get a very competitive rate, for either taking a higher-spec vessel West or taking a dedicated CPP trader East. On a last note, it is certain that the continuous drop of bunker and crude oil prices will have a great impact on the shipping markets during 2015 as well. But to what extend this trend will continue translating into higher freight rates, is probably the right question to ask”, he concluded.