U.S. Gulf of Mexico
Available space has been noted for the second half July and into August on some lanes, but this is not to be confused with a market having space in abundance.

U.S. Gulf-to-Caribbean space continues to be tight through the end of July, with some regulars already looking to August as their next available opening. Routes from the U.S. Gulf to the east coast of South America continue to show some completion space available for smaller parcels, with 5,000 tons of base oils from the U.S. Gulf to northern Brazil still expecting to pay around $42/t. A firm cargo of some 10,000 tons is likely to find a candidate willing to use that as a base cargo and parcel up around it.

Although some owners continue to avoid Asia, some small pockets of space continue to be seen in July and August on the U.S. Gulf-to-Asia trade lane. While the rates continue to vary, depending on the sensitivity of timing and locations, 5,000 tons from the U.S. Gulf to Korea is still generally expected to bring a rate in the high $60s/t, while a main-port Chinese destination is likely to see something more along the lines of $75/t.

While some space does exist on the transatlantic eastbound leg from both the U.S. Gulf and U.S. Atlantic coast, the best rates are likely to be seen by those able to bring a firm cargo for quick fixing, though a westbound trade is likely to find its fill of interested tonnage.

Europe
While the Baltic and North Sea trade continue at their recently modest pace, tonnage continues to be widely available, especially on the short haul lanes, and an 8,000 ton parcel is likely to find interest, even on the longer haul routes.

The Mediterranean market remains relatively active with import opportunities, but limited northbound cargoes are not allowing tonnage to naturally reposition within the region.

From Antwerp-Rotterdam-Amsterdam to the central Mediterranean, expect to pay in the low $40s/t for a 3,000 ton cargo.

While some of the recent rates to east-of-Suez destinations were reported to have paid relatively high numbers on prompt tonnage, these are not believed to be indicative of the general market today, but rather opportunistic moves by the few owners showing interest in the intermediate eastern Mediterranean to west coast of India trade. Though with return opportunities still quite limited, rate levels in the mid $70s/t should be expected for 4,000 to 5,000 tons.

Transatlantic westbound is still having a reasonably poor showing, though with some intermediate sized cargoes of gasoline components trying to move, a piggy-back opportunity for low-to-mid $30s/t on a 5,000 ton cargo is not out of the question.

With piracy in the Indian Ocean a key concern, those that can avoid the area are trying to do so by taking the longer and more expensive route around the Cape. With many of the base oil cargoes in this direction being of smaller sizes, expect to pay around $125/t into Singapore and $130/t into China from the Baltic.

Asia
The unfortunate status quo continues in this region, which is to say that too few cargoes are available to fill out too much space, enticing many owners to trade their ships within the region on short haul runs, instead of some of the more traditional longer haul routes, which also allow for repositioning of the ships.

Some contractual obligations are forcing owners to move towards Europe and the United States without filling out, leaving available attractive rate levels for those that have a firm opportunity.

Biodiesel continues to see its share of starts and stops on the shipping market, while some of the other traditional cargoes such as palm oils, acids and chemicals are showing promise. To say this is a resurgence might be a bit too optimistic.

Rate levels dont seem able to move much further, however, with bunker prices continuing to hover near $400/t, there comes a point where the owners simply cant lower the rates any further. With 5,000 ton lots from Korea to Rotterdam still expecting to pay around $50/t, and from Korea to Houston still in the high $40s/t, we dont see any recent changes. Where the opportunities would seem to exist would be in the 8,000 to 10,000 ton range of lot sizes, which can easily tempt an owner wanting to depart the region into levels much closer to $40/t.

Notes
With the European Union extending biodiesel tariffs to counter U.S. subsidies to five years from the previous provisional status, and with the push for additional anti-dumping duties whose rates are as high as 41.1 percent, we expect to see the drop off in biodiesel business continue. U.S. exports to EU nations have comprised over 17 percent of the entire EU biodiesel market, so this is a very large quantity of material that will now be consumed elsewhere.

Some of this volume will be taken up directly from South America, and other portions will be taken up from Asian origins. Not all of this lost volume is expected to be needed in the current market, which already faces an oversupply issue. The full net results of the tariffs and duties are yet to be seen, though we expect some of the traditional shipping lanes will need to see some restructuring.

Adrian Brown, senior market analyst for chemicals and base oils with SSY Shipbrokers, London, is travelling this week. 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.