Friday, 20 March 2009

Delays in offloading palm cargoes in China

Delays in offloading palm cargoes in China

Business Times, 20th March

TANKERS carrying palm oil from Malaysia and Indonesia face delays of up to a month in discharging their cargoes at destination ports, especially in Southern China, due to oversupply, Malaysian traders said today.

Top palm producers Indonesia and Malaysia ship about 100,000 tonnes of palm oil products each week to China, the world’s largest consumer of vegetable oils, historical data shows.

The latest delay is for a 54,000-tonne tanker from Indonesia chartered by a Singaporean based palm producer, which may have to wait for two weeks or more to offload consignments of crude palm oil and refined palm olein, a top Malaysian trader said.

“The tanker came into Guangzhou port today but it will have to wait for more than the usual one week to offload such a big ship,” said another trader based in Malaysia’s top palm producing state, Sabah, which regularly ships to China. “There is definitely some congestion there.”

China has built up high stocks of imported vegetable oils this year after just two to three months of aggressively buying palm oil from Asia, traders say. The East Asian nation does not release data on its imported vegetable oil inventories.

Traders say the recent delays for tankers to unload in China could have a bearish undertone for palm oil prices as the supply chain chokes up.

“Despite the drawdown in stocks in Malaysia and Indonesia, mills may soon get filled up with palm oil when the production upswing starts in April or May and harvesters will eventually be unable to pluck the palm fruits because of this,” a trader said.

Malaysian crude palm oil futures rose more than 2 per cent by 0741 GMT on Friday as crude oil’s surge in the previous session resonated through global vegetable oil markets, offsetting weakness in palm oil shipment data.

Plantation firms that deal mostly with China include Singapore-listed Wilmar International, Malaysia’s IOI Group, Kuala Lumpur Kepong and Kwantas Corp while Sime Darby is an emerging player in the market.

“Of the roughly 100,000 tonnes of palm cargoes shipped to China each week, about 50 per cent have got delayed over the past few weeks,” said another Malaysian trader, dealing mostly with East Asia.

“Everybody is facing the same problem. The recession is making buyers operate on a hand-to-mouth basis, which is leading to some port congestion.” - Reuters