In Asia, domestic markets appear to be in decline, whereas export markets are steady. Europe is exactly the reverse, with domestic trades faring better than export. The United States has been rather subdued this week.
U.S. Gulf of Mexico
It has been a slow week on the U.S. Gulf to Caribbean market with minimal demand noted. Southbound on the U.S. Gulf to the east coast of South America route has been fairly busy on the small chemical parcels trade, but nonetheless there are several ships that require the last couple of tanks to be filled. Some last-minute bargains might be obtainable if there are some base oils that can be moved at short notice.
Not much has been happening transatlantic eastbound. Traders have dipped their toe in the water to assess rates for aromatics but nothing has materialized so far. Traders have also been checking rates for styrene and aromatics on the U.S. Gulf to the Far East route, but the arbitrage opportunities are clearly not open wide enough to allow much to be fixed, and there remains quite a lot of open space on this service. Freights are drifting lower on this route and will continue to do so unless a surge in demand occurs.
Europe
The month of May is festooned with public holidays in Europe and these can cause severe disruption to trade. It is common to hear observers talk about the summer doldrums, but in fact May and June can often be quieter because entire companies and countries are closed for business, unlike the summer when only individuals take holiday. The last couple of summers have in fact been busy. So far, only the long haul routes have felt a contraction in trade, whereas the coastal markets have been reasonably busy.
In terms of base oils, the most active markets have been the inter-Mediterranean and the route down into the Mediterranean from Northwest Europe. The North Sea and Baltic have been quiet with few base oil shipments spotted from the Baltic. In the Mediterranean, there have been occasions this week when prompt space has been tricky to find. This is especially the case in the West Mediterranean, where base oils have had to compete with other cargoes such as caustic, fatty acid methyl ester, MTBE and aromatics.
Transatlantic westbound is saddled with excess prompt space, not necessarily from the scheduled carriers who are mostly full for the next couple of weeks ahead, but more from the sheer numbers of ships that have brought cargoes into Europe and are now struggling to piece together enough business to get away again. Most of these ships are fairly large units too and so require sizeable cargoes. There have been possible base oils into West Africa and Central America, and such cargoes have attracted interest from owners.
Europe to Far East is rather slow, especially since a number of cargo requirements from previous weeks are taking a long time to materialize. Some base oil interest is reported among the cargoes of ethylene dichloride, phenol, paraffins, acrylonitrile and aromatics. There is not a huge amount of open space from Northwest Europe to India-Middle East Gulf yet, nor is there a great deal of demand either, and rates are under downwards pressure.
Asia
Unfortunately for ship owners, the public holidays in Asia took their toll on the amount of domestic business concluded over the past week, and quite a large percentage of the fleet ended up fixing nothing all week. Cargoes such as glycol, paraxylene, benzene, styrene and base oils are slowly making a welcome return, but there is still too much open space available and rates are weak.
Asia Export markets have seen a fair number of methanol enquiries to the Americas, along with cargoes of caustic, biodiesel and hydrotreated vegetable oils. Space is tight in that direction and rates are rising. Business to Europe, however, has not been as abundant and several ships are left with prompt space. Asia to India and Middle East Gulf has produced a number of possible base oil shipments, along with parcels of caustic, acetone, phenol, solvents and acetic acid. The market out of India and the Middle East Gulf is fairly firm westbound, with space limited to just a few vessels. For example, 15,000 metric tons of methanol from the Middle East Gulf to Northwest Europe was fixed in the low to mid $70s/t.
Eastbound is also fairly active with some larger cargoes of methanol, MTBE, styrene, glycols, paraffins, ethanol and aromatics quoted, several of which have been in the market for well over a week. Space is not plentiful, but all the same there are ships available at various intervals throughout the first half of the month.
Adrian Brown is senior market analyst for chemicals and base oils with SSY Shipbrokers, London. Information about SSY can be found at www.ssyonline.com. Adrian Brown, in the U.K., can be reached at fix@ssychems.com or by phone at +44 1207-507507. In the London office SSYs Jordi Maymi can be reached at fix@ssychems.com or +44 20 7977 7560.