US-India Trade Deal Threatens Longhaul Vegoil Trade and Chemical Tanker Demand
Growth in longhaul vegoil trade, particularly soybean oil to India, has boosted chemical tanker demand due to Indonesia's reduced palm oil exports from higher biodiesel mandates. However, a potential US-India trade deal allowing GM soybean imports could enable India to increase domestic crushing. This would reduce India's reliance on imported vegoils, curbing longhaul flows and softening chemical tanker demand, despite future decreases in Indonesian palm oil availability.
The article details a significant shift in the global vegetable oil market driven by Indonesia's escalating biodiesel blending mandates. As the world's largest palm oil exporter, Indonesia's mandates (from B30 in 2023 to B40 in 2025, with B50 expected in 2026) have reduced its palm oil exports and increased prices, eroding palm oil's historical price advantage over soybean oil. This has prompted price-sensitive importers like India to shift from shorthaul palm oil cargoes from Southeast Asia to longhaul soybean oil shipments, primarily from Latin America. This change has substantially increased tonne-mile demand for MR chemical tankers.However, this positive trend for longhaul vegoil trade faces a critical risk: ongoing US-India trade negotiations. If India allows imports of genetically modified (GM) soybeans from the US, it could significantly boost India's domestic crushing capabilities. This increased domestic production would reduce India's reliance on imported vegoils, potentially curbing longhaul vegoil imports and consequently softening tonne-mile demand for chemical tankers. This outcome could negate the growth spurred by Indonesia's biodiesel policies. The article also notes concerns about overall global vegoil market tightening if soybean oil supply cannot fully offset reduced palm oil availability, compounded by constrained sunflower oil supplies.
