The European market recorded a more satisfactory week with increased demand in several sectors. Asia too has been slowly but surely generating more business. It is just the U.S. market that has been in the doldrums, but even here there are faint signs that things are happening again.
U.S. Gulf of Mexico
The U.S. market has been slow for a long time, and there are still a large number of ships that continue to struggle to find any kind of cargo. However, this week there has been a very faint shift, and ships that had been touting for completion cargoes have successfully filled and gone. For some, it will undoubtedly have been painful with very competitive numbers likely, but it does mean that on some routes, owners are more confident and may try to ease freights back up.
The U.S. Gulf to Caribbean, for instance, is a trade lane where a slight increase in trade is being translated into higher freight ideas.
The U.S. Gulf to East Coast South America is already tight on scheduled space, and charterers are somewhat hoping that a couple of the surplus ships in the U.S. Gulf will find something to act as a base cargo and go on berth.
Returning northbound, space is also tight, and 5,000 ton base oils from northern Brazil to Brownsville, Texas, and Tampa, Fla., for extracted rates of mid $90s/t, although the dates subsequently changed and the cargo was not fixed.
Eastbound transatlantic remains weak. Very little new business has been forthcoming and consequently there is still a fair amount of open space. Rates are notionally around $48 to 49/t for 5,000 ton parcels from Houston to Rotterdam, but even replacing Rotterdam with ports such as northern France or the lower Baltic only adds a moderate amount to those freight rates.
The U.S. Gulf to Far East gives the impression of being very quiet, but one by one the remaining July ships have filled. Small parcels on the whole have been noted, such as phenol, glycol and acrylonitrile, with only talk of the occasional benzene/toluene/xylene or styrene a possibility. Rates must be almost at rock bottom, especially since bunkers are in the region of $615/t FOB Houston, with very low $50s/t being talked for 5,000 ton parcels for Houston to scheduled principal ports in the Far East.
In contrast, the U.S. Gulf to West Coast India is already looking quite tight for August. Several base oil cargoes are apparently being worked at the moment. Rates will probably end up at $120 to 125/t for smallish parcels of 2,500 to 3,000t to West Coast India.
Europe
The increase in trade noted last week in the North Sea and Baltic has continued this week, and space remains somewhat tight. Increased volumes include base oils, as well as gasoline component materials and biodiesel.
Southbound into the Mediterranean is steady, with no increase in freights noticeable this week, and the same is in effect northbound from the Mediterranean. Inter-Mediterraneanbusiness, however, has picked up and in some cases, on certain dates, West Mediterranean has been particularly short of tonnage, and we have seen ships ballasting all the way through the Mediterranean from the Black Sea, which only adds to the freight bill.
Base oils have continued to move into Turkey and Egypt this week, while an unusual enquiry was made for 3,000 ton base oils from Huelva, Spain, to Berre France, which would normally be supplied from a parent company.
Transatlantic westbound is one route that has benefitted from an increase in trade. Primarily aromatics and pyrolysis gasoline, there has also been some interest in shipping base oils to the U.S. Gulf of Mexico and Mexico. Rates have mounted, and 3,000 ton parcels from Rotterdam to the U.S. Gulf of Mexico are being talked in the mid $50s/t.
Europe to the Far East has been blessed with additional demand, too, with cargoes of assorted aromatics, butanols, acrylonitrile, phenol and base oils. Typical 5,000 ton cargoes from Rotterdam to scheduled principal ports in the Far East now command rates in the mid $80s/t, and July space has disappeared.
Europe to west coast India to the Middle East Gulf is busier, and space has tightened a fair bit. Phosphoric acid, base oils, vegetable oil, pyrolysis gasoline and aromatics are leading the way, with rates pushing back into the mid $70s/t for 5,000 ton cargoes for Rotterdam to west coast India.
Asia
The Domestic Asian market is best described as steady. Chinese demand has been nudging upwards over the past week, but many owners consider it still below normal. The main fare is aromatics, styrene and glycol, with relatively little appetite for base oils.
Some of the rates from Southeast Asia to China have been creeping up with low $40s/t being seen for 4,000 ton parcels to certain Chinese destinations.
Southbound, however, has not been so busy, and any cargoes have been quickly fixed. Intra-Southeast Asia has noted some benzene parcels from Thailand into Singapore, the rates for which have been in the $25 to 27/t region for 3,000 ton cargoes.
Asian Export demand is chiefly driven by palm oils, the rates for which have begun to move back up after a brief period of reductions. It seems that as soybean oil becomes scarcer and thus more expensive from South America, so demand will grow for palm oil as a replacement.
Long-haul rates from Asia to Europe are pretty comparable to previous weeks, with perhaps just a slight increase being felt for Asia to the United States due to an arbitrage for benzene that has opened, the rates for which are in the upper $40s/t for 15,000 ton cargoes from Korea to United States Gulf of Mexico.
In spite of the onset of Ramadan, business from India to the Middle East Gulf has been surprisingly busy, with a number of cargoes fixed westbound. There are nonetheless a large number of ships open in the region, thanks to the import of palm oil cargoes, which means that eastbound rates are not going anywhere fast.
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.