India clarifies port access restrictions
India clarifies port access restrictions
KUALA LUMPUR (Reuters): Palm oil traders breathed sighs of
relief on Tuesday after India offered some clarifications on port
access restrictions that had sent jitters of concern through the
market over the fate of shipments from Malaysia and Indonesia.
But prices still remained weak due to lingering uncertainties
over last week's decision by India, the world's largest vegetable
oil importer, to restrict vegetable oils imports to a select
group of ports to facilitate monitoring of overall purchases.
The move had thrown the market into confusion, with shipments
of up to 25,000 tons of palm oil from Malaysia and Indonesia
hanging in the balance until Indian Commerce Secretary Prabir
Sengupta said the order did not apply to cargo in transit.
"There's a provision in the order that it does not apply to
things that have already been shipped or where letters of credit
have been opened," Sengupta told Reuters. "It will only apply to
future shipments".
The comments appeared to dispel market fears voiced earlier,
although some uncertainty remained about the impact of the move.
India's Directorate General of Foreign Trade (DGFT) said last
week traders could import edible oils only through Bombay,
Jawaharlal Nehru Port Trust (JNPT), Calcutta, Cochin,
Vishakhapatanam and Madras.
This was part of government measures to restrict the import of
300 consumer good items only through selected entry points.
Each week, India imports at least 50,000 tons of palm oil from
Malaysia and Indonesia, the world's largest producers, traders
said. About half of this amount normally goes to ports now banned
from receiving edible oils, they said.
These ports include Kandla and Mundra in the western state of
Gujarat, which accounted for about 35-40 percent of India's
edible oil imports of 4.5 million tons in 1999-2000 (Oct-Sept).
Traders said around 100,000 tons of South American soyoil was
also heading for India. But this should also be safe, as they
believed the new regulation only applied to shipping contracts
concluded after the order was announced on May 2.
India's decision also troubled the freight market, which
expected freight rates to the west coast of India to fall soon
due to a lack of shipments there in the future.
"Everybody is looking for clarification. What will happen to
the vessels? I can't answer the question," said one freight
broker in Kuala Lumpur.
Traders said freight rates from Malaysia, the world's largest
palm oil producer, to the west coast of India could drop to below
$25 from the current $28-$29 a ton for May/June because of
uncertainty over future directions.
Benchmark third-month July crude palm oil futures dropped 20
ringgit to 775 ringgit ($203.95) a ton at the close on Tuesday
amid the uncertainty over the Indian news.