Tanker freight in Asia beating popular expectations by staying buoyant into November could hinder chemical and palms cargo flows throughout the rest of the fourth quarter.
- Liquid bulk shipping costs climb despite fleet growth
• El Nino supply jitters prolong palms freight uptick
• Tanker pile-up at ports curtails SE Asia, India tonnage supply
Freight indications having already advanced since September have further increased into November despite new vessel additions and pre-Diwali holiday restocking in India tapering off.
Diwali or Festival of Light is a major Hindu holiday in India.
During the two-week period to 28 October, ICIS-assessed chemical and palms freight indications have risen on most intra-Asia trade lanes.
Palms freight for shipments from southeast Asia to India, as well as China soared to the highest levels in more than three years.
Palms exports from Malaysia for H1 October expanded by 43.2% to 58.3% month on month as a traditional uptick in pre-Diwali restocking kicked in.
Separately, rising crude oil prices also enhanced palm oil’s competitiveness as a biodiesel feedstock, buoying regional palms trades beyond the seasonal increase in activity.
“Palms traders that have been overly conservative during H1 2026 are also ramping up trading activities ahead of year-end financial book closures,” one shipbroker noted.
Palms freight is benefiting from knee-jerk inventory building activities both in India and China stoked by supply jitters in the two largest consuming countries that have been linked to the ongoing El Nino phenomenon.
The El Nino phenomenon of extreme dry weather and drought in the Asia Pacific is expected to reduce yields from plantations and disrupt palm oil production in Malaysia and Indonesia into 2027.
Unlike for palms freight, supply-demand forces tied to regional chemical trades have been mixed, thus far reflected in uneven freight indications across trade lanes.
Active gasoline blending trades are still bolstering southbound chemical freight indications, which continue to outperform those for northbound, intra-southeast Asia and intra-northeast Asia trade lanes.
Whether it be for palms or chemical shipments, however, tanker spaces have become and could remain challenging to secure into November and even beyond.
“Freight [for liquid bulk] is a headache now [especially] for part parcel cargoes,” a trader active in southbound trades separately lamented during the week ended 28 October.
Such challenges, which have become prevalent in the wider market, run contrary to one dominant view earlier this year.
Back then, shipping veterans had suggested that with newbuild tankers entering service hitting multi-year high, liquid bulk freight, including for chemical and palms shipments, should come under pressure in 2026.
Yet, tanker freight indications have not eased even for palms shipments after pre-Diwali restocking lost steam.
Sentiment also remained bullish in the chemical freight market. Shipowners have even pulled back from letting out tanker spaces on spot basis, banking on freight indications to further improve into November, a second shipbroker observed.
Such bullish expectations build upon two positive indicators.
Clean tanker rates have continued to hover around record levels not just because the Middle East war has improved arbitrage for trades within Asia. Tankers previously earmarked for clean petroleum products have also been diverted to ship crude and other dirty products.
Tanker freight also drew support from unrelenting cost inflationary pressure. Marine fuel costs in Singapore, the world’s top bunkering hub, generally climbed since mid-September, nearly touching $1,000/tonne on 27 October, based on industry data.
In southeast Asia and India, tanker supply is still being compromised by severe disruptions to vessel schedules attributed to still ongoing port congestions.
“Tankers holding gasoline blending cargoes were seen waiting for more than 10 days to berth at a petrochemical hub,” a third shipbroker noted
