Northbound is no better. Normally ethanol, biodiesel and vegetable oil could be relied upon to provide cargoes out of the area, but strong domestic demand results in fewer export opportunities. There are presently a variety of prompt ships open in Brazil and Argentina that would be interested in any base oil cargo from the area in any direction.

There is not much space left on the U.S. Gulf to Mediterranean service, but there are still ships able to provide space for Northwest Europe. We see freights as having dropped further on this leg, and it should now be possible to fix 5,000 tons of base oil from Houston to Antwerp-Rotterdam-Amsterdam in the low $40s/t.

Levels have dipped by $1 to $2/t for cargoes from the U.S. Gulf to the Far East. Again, contractual demand is reasonably steady, but the flow of spot business has dried up. A small base oils cargo from the U.S. Gulf to Mumbai could end up costing around $100 to $110/t for 2,000 tons, but it might be worth considering instead building the cargo size up to 10,000 t to attract some of the idle tonnage in the U.S. Gulf. Such a volume could end up finding an owner willing to ship the cargo at $80/t.

Europe
It has been another bitterly contested market in Northwest Europe and the Baltic. By all accounts, there is ample prompt space for most requirements. Even the normally robust market into the Mediterranean has sagged, and we have heard of vessels sailing empty southbound, or taking clean petroleum cargoes into Spain and the western Mediterranean as a way of getting the ship back into the Mediterranean.

The Mediterranean itself has been poorly stocked with new cargoes. It is common to hear of 10 offers for every cargo quoted. It had been expected that the rising cost of bunkers would keep rates in check, but it is clear that this is a luxury that not all owners are taking into consideration.

Europe-to-Far East is lacklustre and space is opening up, even for September loading. Rates are notional, but there are suggestions that $70/t might be sufficient to clinch 5,000 tons of space from Antwerp-Rotterdam-Amsterdam to the Far East, though some owners are hoping to cling on to rates around $80/t. Europe-to-India is fairly busy, and numbers are holding up. Transatlantic westbound is also stable.

Asia
There has been another surge in palm oil bookings, chiefly to India and Pakistan, but more cargoes have also been booked back to Europe and the Mediterranean. Consequently, the amount of open space in Asia has thinned for September loading back to the Mediterranean and Europe. It is also the case to the U.S. Gulf, although we have heard of ships ballasting that way, or part-ballasting and taking cargoes that will at least contribute to costs. A 5,000 t cargo from Southeast Asia to a principal scheduled Mediterranean port now fetches around $55/t, and some $5 to $10/t more for smaller ports off the main routes.

The Middle East Gulf and India regions are still overtonnaged, mainly because of the additional palm oil cargoes from Asia and the sustained deliveries of acids, pyrolysis gasoline and base oils from Europe. Freights discussed by charterers have been in the $40s/t for 5,000 to 10,000 t cargoes from the Middle East Gulf to the Mediterranean, but such levels are regarded as too low by the majority of owners who are aiming higher in the $50s/t. There are however so many ships that it only takes one owner to give way for the new level to be established.

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.