Financial Daily from THE HINDU group of publications
Thursday, Aug 12, 2004
Agri-Biz & Commodities
Oilseeds & Edible Oil
Industry & Economy - Exports & Imports
As trade awaits cut in tariff rate Palm oil imports reduced to a trickle
Chennai , Aug. 11
NOT a single tonne of palm oil has been booked for import since the beginning of this month. And its shipments into the country have been reduced to a trickle from the second half of June.
"The current situation is in view of the trade waiting for the Centre to revise the tariff rate (base import price) for the palm group of oils," trade sources said.
The base import price, introduced to prevent under-invoicing, is used for calculating the customs duty for the oils.
"Also, freight rates have gone up in view of the Centre fixing a new norm for oil tankers to call on Indian shores. Oil tankers above 20 years are not allowed in Indian waters," the sources said.
This has led to import of palm group of oils slipping to 66,625 tonnes during July from 2.73 lakh tonnes (lt) in June. Even this is lower compared with imports of 4.06 lt during the same period last year.
"There is no point in buying palm oil and losing," trade sources said. "One of our fears is that the tariff rate could be changed anytime and if we buy oil now, we could end up losing at least Rs 4,000 a tonne," they said..
"Currently, there is over $100 a tonne difference between the tariff rate and the prevailing market rate," the sources said.
RBD palmolein attracts a tariff rate of $552 a tonne, while for crude palm oil it is $504. In the case of RBD palm oil it is $543 and for crude palmolein the rate is $532. Other palm oils attract a tariff of $523 and other palmolein $542.
These rates are higher than the c&f prices of the palm group of oils. For example, the c&f price of RBD palmolein is $447 a tonne, (Rs 20, 785) while for crude palm oil it is $407 (Rs 18,925.50). On landing, crude palm oil attracts 75 per cent customs duty, whereas refined palm oil suffers 85 per cent duty.
"Palmolein is at least Rs 4 a kg higher now in the wholesale market because of the high tariff rate. If it is revised, it would not only help trade but also consumers reeling under high inflation," trade sources said.
The tariff rate for palm group of oils was last revised in October 2003, when prices shot up on fall in oilseeds crop production worldwide. The trade has been looking forward to a revision after crude soyabean oil rate was cut to $628 a tonne from $702.
"The problem is not importers booking orders but the situation that could arise from next month, when demand will peak," the sources said.
The reasons are that no arrivals are expected from any of the domestic oilseed crops and a series of festivals will lead to higher demand. "This year, oilseed arrivals in the market are expected to be late due to delayed monsoon," the sources said. "Therefore, there is all the possibility of a flare-up in edible oil prices," they said.
"The other problems facing the market and consumer are stocks in the country are low and it will take over two months for soyabean oil to arrive in our shores," the sources added.
The drying up of imports has also led to a firm trend in other oils, particularly groundnut oil. On Wednesday, RBD palmolein was quoted at Rs 415 for 10 kg in Mumbai market, while groundnut oil ruled at Rs 500.
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