On the U.S. Gulf to Far East service, owners are waiting to learn how much space they must allocate to contractual partners before being able to tackle spot market requirements, which in turn will determine what freight levels to shoot for. So far, owners are looking to achieve numbers that are 10 to 15 percent higher than current market levels. Their ideas are deemed too high for current trading conditions, so a stalemate exists for now. Base oils are not really in contention on this route, but aromatics, ethylene dichloride and ethanol are the big things that might develop. Methanol should also see some arbitrage open with Chinese buyers restocking after their national holidays.

Scheduled transatlantic carriers report strong contractual volumes, and even the outsiders that came on berth seem to have largely filled out. Base oils in the amount of 6,000 tons were being discussed for shipments heading back to Antwerp-Rotterdam-Amsterdam or Havre, France, with cumene, acrylonitrile, vinyl acetate monomer, used cooking oil, vegetable oil and urea ammonia nitrate all making an appearance. Rates are notionally unchanged so far.

On routes from the U.S. Gulf to Caribbean, there are a couple of examples of prompt ships hanging around waiting for their chance to fix, but in fairness they are not best suited to the small parcels trade and are more than likely hoping for a single slug of vegetable oil, of which there have been several examples seen off later dates. Most other owners have covered their immediate open positions and are looking for cargoes several weeks down the road. Apart from the potential shipment to Punta Cardon, Venezuela, base oils are somewhat quiet at present.

Trade has been fairly slow to the east coast of South America for a couple of weeks. Traders are starting to look at shipping ethanol into Brazil, and recent reports suggest the U.S. has ample product to export. Caustic, however, has been confined to some small lots, while base oil activity is minimal at present. Rates are probably still in the low- to mid $50s per metric ton for 5,000-ton parcels from Houston to Santos, for example.

Base oils are one of the grades that traders are studying to India, along with parcels of acrylonitrile, ethanol and styrene. Chemicals in the amount of 8,000 tons are about to load from the U.S. Gulf to the west coast of India for a rate reported to be in the $70s/t, as a guide.

Europe

The European Petrochemical Association event has just taken place in Budapest, and rather surprisingly, there was not a long queue of idle ships in the Baltic Sea awaiting delegates on their return. The small clean petroleum market has picked up to some extent and chemical contracts are performing reasonably well apparently. Spot base oils activity has been noted, with a couple of cargoes shipping out of the Baltic. Rates all around, however, are still highly competitive.

Southbound owners who are left with prompt open space are offering at competitive levels, but forward rates are slightly higher. Paraxylene cargo of 6,000 tons from Rotterdam to Iskenderun, Turkey, was heard to have gone at $39.50/t, for example. That level is still a lot lower than those seen earlier in the year, but it is up a little compared to the most recent fixture done. A base oil shipment of 2,400 tons was finally fixed from Riga, Latvia, to Oran, Algeria, after a couple of weeks of trying to find a ship.

The attempt to ship 12,500 tons of base oils northbound from Augusta, Sicily, to Rotterdam, the Netherlands, that was mentioned in the previous report certainly paid off for the charterers, with levels of $20/t reported, which is a substantial saving on the usual freights for 6,000-ton cargoes. Freight out of the Mediterranean does seem to have drifted downwards all over. A 5,000-ton haul of benzene, toulene, and xylene from Priolo, Italy, to Antwerp-Rotterdam-Amsterdam, for example, was being working for just under $200,000, which in itself was cheaper than the 5,000 tons of alkylate from Augusta to Antwerp-Rotterdam-Amsterdam that was fixed two weeks back for $207,000. A small spot cargo of base oil is being attempted from Cartagena, Spain, to the United Kingdom.

Ship owners have found things to be a bit busier within the Mediterranean, and the number of idle ships has been substantially reduced. Moreover, there are prompt cargo enquiries that have been pushed around for a couple of days without being covered. Rates are still not to the owners liking, but with more ships being fixed into October positions, they might begin to adopt a firmer stance. Spot base oil opportunities are somewhat limited though, partly because of plant maintenance but also because some of the cargoes that used to be spot fixed from Spain have recently become small COAs (Contract of Affreightments).

It has been another disappointing week for owners on the westbound route. The U.S. is short of benzene, but prices still favor material from Asia rather than Europe. The trade in paraxylene has stopped for now because the U.S. is long with its own paraxylene production. Toluene amounting to 4,000 tons from Antwerp-Rotterdam-Amsterdam to Houston fetched just around $20/t over the past week or so. Acetone in the amount of 3,000 tons from Antwerp to Houston seemingly went in the upper $30s/t. Wax, 5,000 tons of which, going from Fawley, U.K., to Baton Rouge, U.S., settled at $50/t. A couple of big cargoes of sulphuric acid and MTBE were booked, all at slightly lower levels than the previous time. Base oils are not getting much attention despite these kinds of freight levels.

It has been a rather doleful week in terms of spot fixing to the Far East. Contractual volumes are mostly stable, however, and so there is not much opportunity for outsiders to snatch a spot market cargo and get on berth. A cargo of base oils was booked from the Black Sea to the Middle East Gulf and Singapore, while parcels of styrene from Antwerp and Gonfreville, France, seem to be the other main grade quoted. A 16,500-ton phosphoric acid load from Tunisia to China seemingly elicited just a single offer, and may be expected to fetch $60/t-$65/t.

Demand has been reasonable for trade to India and the Middle East Gulf, but rates have not really changed because there is simply too much tonnage on berth on the scheduled runs. Base oils continue to move, with 2,600 tons just loaded in Gdansk, Poland, for Hamriyah, U.A.E., and the next requirement on this route has already been quoted. A 2,500- to 3,000-ton parcel of acrylonitrile from Aliaga, Turkey, to Kandla, India, was fixed in the mid- to high $80s/t, against charterers initial ideas of $70/t.

Asia

Space appears to be tight through the first half of October on the intra-Far East routes as well as northbound routes from Southeast Asia. Some owners have even managed to fix ahead to the end of October or early November, having taken advantage of the cargoes that were quoted before the week-long national holiday in China. A succession of typhoons in the area have caused considerable disruption since many ports have suffered closures and subsequent berthing delays. Colder weather in the region has boosted demand for small clean petroleum cargoes, while palm oil demand has picked up slightly. Rates generally are not any firmer, although isolated examples of stronger numbers have emerged. Base oils are not that busy either. More correctly, volumes seem to be smaller: instead of 3,000-ton cargoes, charterers are looking at 1,000-2,000 tons.

October space among the scheduled carriers on the transpacific west route is also tight. There are a couple of outsiders that are known to be in position, but they have yet to reveal which direction they will take. Benzene seems to be the main grade, with some cargoes already booked for October and further enquiries circulated. Cumene also seems to be a possibility, and ironically traders are looking at sending 20,000 tons of paraxylene back to the U.S. At the same time, traders are targeting Asia for paraxylene from the U.S. It seems there is a surplus of paraxylene all over, which at least should assist the ship owners.

The market back to Europe is giving out mixed messages. Small parcels into the Mediterranean are certainly seeing much higher numbers – 1,500 tons of chemicals from Yangtze River, China, to the west coast of Italy paid $185/t, for example, whereas 8,000 tons of biodiesel from southern China to Antwerp-Rotterdam-Amsterdam is reckoned to have gone in the low $60s/t. The September cargo of biodiesel was just 5,000 tons and reportedly paid high $50s/t, so owners may see this as a step in the right direction.

Despite several important national and regional holidays in India, the regional market within India and the Middle East Gulf is again considered to be more active, with the result that prompt space has tightened slightly. Base oils are trying to be busier, with cargoes moving from the Red Sea, the Middle East Gulf, Pakistan and occasionally Iran.

Eastbound traffic has been slow with relatively fewer larger cargoes quoted this week. The main grades seen here are styrene, ethylene dichloride, MTBE, ethanol, paraffins, linear alkyl benzene, orthoxylene, paraxylene and some glycols. There are also some sizeable volumes from Iran.

Westbound volumes have been thin. Benzene was attempted from Yanbu, Saudi Arabia; cyclohexane from Hazira, India; caustic from Iran; as well as small lots of glycol, vinyl acetate monomer, butac and ethyl acetate. A cargo of 8,000 tons of base oils was noted looking for space from the Middle East Gulf to northwestern Europe.

Adrian Brown is a senior market analyst for chemicals and base oils with SSY Shipbrokers, London, can be reached at fix@ssychems.com or +44 12 0750 7507. Information about SSY can be found at www.ssyonline.com. In the Houston office, Panos Giannoulis of SSY’s Chemical Tanker Department can be reached directly at panos@ssychems.com or +1 (713) 652-270 and Jordi Maymi in Singapore can be reached at +65 6854 7127.