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January 31, 2001
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Indian quake hits Malaysia shipments

Up to 100,000 tonnes of crude palm oil bound for India are still stranded in Malaysia and Indonesia, the world's top producers, after last week's earthquake damaged the port of Kandla, traders and shippers said on Wednesday.

"I won't be surprised if the amount of CPO stranded in Malaysia and Indonesia reach 100,000 tonnes because there are no shipments to Kandla," said one shipper in Kuala Lumpur.

Other traders said the amount of crude palm oil still waiting for shipments to Kandla from both countries could reach between 70,000 and 100,000 tonnes in total.

Kandla, India's busiest port in the state of Gujarat has seen no commercial activity since Friday's quake which killed at least 20,000 people. Shippers and other officials said commercial operations were unlikely to resume before the middle of February.

Shipments may be diverted

"Some people are talking about diverting shipments to Mundra port. But I don't think people have started doing so," the shipper in Kuala Lumpur said.

Traders in Indonesia said they could not come up with the amount of crude palm oil still waiting for shipments to Kandla, but added they might divert the cargo to Bombay.

Crude palm oil from Malaysia and Indonesia is normally shipped to Kandla while other products, such as refined, bleached, deodorised (RBD) palmolein, are unloaded in other ports such as Kakinada and Bombay, according to traders.

Most of Malaysia's palm oil exports to India are in the form of olein.

Shippers said freight rates to India (West Coast) from West Malaysia rose slightly to $28-$30 a tonne for CPO and RBD olein from $27-$28 a tonne last week, while rates to the east coast were stable at $22-$25/tonne.

The earthquake damaged at least 50 per cent of the buildings in Kandla, which was near the epicentre, and affected jetty and warehousing operations.

The Kandla port chairman said on Wednesday it expected to start dry cargo operations in the next three or four days.

Fear of disruption of shipments to Kandla sparked a drop in physical crude palm oil in Malaysia to 720 ringgit ($189.47) by midday on Wednesday for February shipments from 745 ringgit ($196.5) a tonne last Friday.

"People who can't ship the cargo to Kandla fill up the market with their oil," said one trader in Kuala Lumpur.

"This is force majeure. If someone in Kandla says (the port) can't take the oil for another 10 to 15 days or even a month, there's nothing you can do about it," he added.

India was Malaysia's main palm oil buyer in 1999, taking 2.3 million tonnes. The country is also one of Indonesia's main markets. Cargo surveyor Societe Generale de Surveillance Malaysia Sdn Bhd said on Wednesday India bought 170,127 tonnes of palm oil, which include 44,777 tonnes of crude palm oil in January.

It imported 183,205 tonnes of palm oil from Malaysia in December, in which 71,910 tonnes were crude palm oil.

The Complete Coverage | List of earthquake sites

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