Is the summer lull about to begin? The United States is fairly robust, but more ships are beginning to show up in July. Europe has been quiet on the coastal markets, with deep-sea more or less unchanged. Asia has seen some export business, but there are still way too many ships open in the region.
U.S. Gulf of Mexico
Looking at the overall tonnage supply, the U.S. market is very tight on prompt space. Of course, there are always one or two ships on most routes that have the occasional tank, but most prompt requirements would only attract one or two offers. Consequently, there is not a lot of room to leverage the freights.
Waiting until mid to late July however does see a new crop of tonnage opening up in the U.S. Gulf, and it is here that some owners may be tempted to swallow a lower freight in order to cover their ships for the remainder of the holiday months.
Looking at demand for vessel space, we do not see a great deal of demand on the U.S. Gulf to Caribbean or to Mexico, or to the east coast of South America trades. However, contractual customers are maximising the volumes they can lift, which does mean that spot market rates do not show much slippage.
Finding space for larger lots is more of a problem, and the cargo of 10,000 tons of base oils from the U.S. Gulf to Lagos that has been quoted for several weeks exemplifies this situation.
Transatlantic eastbound has seen several traders looking at cargoes of benzene to Europe. Again, because this route is largely contracted out, rates for 5,000 ton cargoes have lifted to around $50/t. The main players on the U.S. Gulf to India run are full for July, or can perhaps just squeeze in a small parcel of 3,000 tons or so, costing around $100/t.
There is not a great deal of space on the U.S. Gulf to Far East route either for July. Demand is muted however, with just some smaller cargoes of styrene, paraxylene, methanol and base oils quoted. For nonapproved tonnage, it may be possible to achieve $60/t for 5,000 tons from Houston to the Far East. Otherwise, expect to see rates in the mid $70s/t.
Europe
Coastal markets have been slow, and there are usually plenty of ships able to fulfil most requirements.
Perhaps the hardest of the inter-European routes on which to secure competitive space is the southbound trade from Northwest Europe to the Mediterranean. There have been numerous chemical cargoes, as well as base oils, the latter heading to Turkey in particular. Within the Mediterranean, things have been a bit more subdued, and tonnage can be picked up for relatively modest freights.
Transatlantic westbound is not busy, but it is not totally flat either. Caustic, pyrolysis gasoline, solvents and base oils are all workable right now. 5,000 ton cargoes from Rotterdam to Houston are fetching around $35/t. There is space available for Mediterranean loading, with the feeling that a 5,000 ton parcel from southern Spain could achieve a level in the $40s/t right now.
Europe-to-India is busy, with good possibilities to fix acids, caustic, ethylene dichloride, solvents and aromatics. Base oils are in good demand too, with cargoes heading to India and the Emirates. Rates are typically in the mid $70s/t for 6,000 to 7,000 ton lots from Northwest Europe, and a fraction lower from the Mediterranean.
East of Suez is not a popular destination for most ship owners, and some may need to be convinced. Demand for chemicals into Asia continues strong, and it is common to hear of levels of mid $90s/t for 5,000 ton lots from Antwerp-Rotterdam-Amsterdam to China, with smaller parcels priced anywhere from $130 to $170/t.
Asia
The traffic in palm oils from Asia continues to provide a way out for those vessels stuck in the region, but at a very low level of income. Rates however appear to have reached the floor and are not going any lower. In some cases, owners have rejected these levels and are ordering the ships to ballast, in some cases as far as the River Plate or even into the Mediterranean.
There has been a bit of sporadic chemical fixing too, including sulphuric acid, biodiesel and benzene.
It should be possible to fix 5,000 tons of base oils from Korea to Antwerp-Rotterdam-Amsterdam at around $50/t, and at a few dollars less into Houston. The Middle East Gulf and India are other regions that are stuffed full of open space. Again, some ships are ballasting back to the Mediterranean, and if such a position coincided with a loading date from Iran for example, it may be possible to slip a cargo of 5,000 tons of base oils on board for $40 to $45/t into Turkey.
Notes
The poor shipping market looks to have claimed Eastwind Tankers, whose parent company, Eastwind Maritime filed for Chapter 7 bankruptcy protection in the U.S. courts on 23rd June, saying the company will be liquidated.
Eastwind Maritime is a large outfit, running over 100 ships of all different types. The chemical tanker side, Eastwind Tankers shows only five chemical tankers on its position list. All weighing in at around 17,000 dwt, the ships were modified so that they all have double hull, but have the disadvantage of all being built in the late 1980s. At this stage it is unclear what will happen to the fleet. Similar ships, but single hull, have been going to the scrap yard, but with scrap prices barely reaching U.S. $300 per light tonne, there is not much return on the investment that was made converting the ships to double hull last year.
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 directly at research@ssy.co.uk or by phone at +44 1207-507507. In the U.S., SSYs Steve Rosenthal can be reached at fix@ssychems.com or +1 203-961-1566.