U.S. Gulf
Several key routes out of the U.S. Gulf have strengthened since the last report was written, while others have weakened. As expected, U.S. Gulf to Far East freights have come down from the year-end peaks but have not faded that much. For example, 5,000 ton cargoes from the U.S. Gulf to Mainport Far East still command levels in the high $60s per ton, a moderate reduction from the mid $70s/t in the last days of 2010.

Transatlantic eastbound has also lost some ground, whereby the same 5,000 ton cargo from Houston to Rotterdam would now command high $40s/t as opposed to the low $50s/t before. The reasons seem to be that there is more tonnage available now than there was at the end of the year, which has broken the inflationary cycle.

That said, there is not a huge amount of surplus space open in the U.S. Gulf in January, which would suggest that those who fix now may be seeing the cheapest of the rates, at least on transatlantic. U.S. Gulf to Far East rates will be more influenced by the decision of Asian buyers around the time of the Lunar New Year that takes place early in February this year.

U.S. Gulf to the Carribean is generally a stationary market with demand and supply well matched and freights are therefore stable. U.S. Gulf to east coast South America has seen contractual demand lift, which has in turn caused a tighter spot market and consequently higher freight levels have been reported. Levels for 5,000 tons of easy chemicals from Houston to Santos are now in the vicinity of mid $50s/t.

Europe
The way that the holidays fell over the Christmas period meant that there was a significant amount of business conducted during this time and which permitted owners to build up enough of a forward program so as to avoid having open tonnage in the first few days of 2011.

Heavy contractual nominations in the North Sea and Baltic areas ensured the domestic fleet was initially well employed. The Mediterranean fleet has found the start of the year to be more challenging, and there are plenty of prompt ships open in the area, although it could have been considerably worse.

Transatlantic westbound has been dull. A couple of tentative naphtha cargoes were attempted but otherwise the arbitrages for the more usual cargoes remains firmly closed. Rates are still in the very low $30s/t for 5,000 tons of cargo from Rotterdam to Houston, but it will require a fresh injection of cargoes to stop them from sliding.

Europe-to-Asia on the other hand has been busy, and January is looking tight on available space. Larger lots of pyrolysis gasoline, phenol, acetone and oxo-alcohols have been moving into the Far East, causing freights to push upwards into the mid $70s/t for 5,000-ton lots from Rotterdam to Mainport Far East.

Asia
Domestic Asian markets are running well. Paraxylene, MTBE, xylene, caustic and styrene have been seen on the intra-Far East routes. Aromatics, caustic and gasoline components have been noted southbound while northbound has created interest in benzene/toluene/xylene, acetone, phenol, MTBE and base oils.

Export rates are generally firm, mainly down to the firmness of palm oil freight levels that act as a benchmark for owners with tonnage open in the area. For example, 20,000 to 25,000/t lots of palm oil and biodiesel from the Malacca Straits to the Western Mediterranean are currently seeing offers ranging from the low $70s/t to the high $70s/t.

Business is a bit quieter westbound out of the Middle East Gulf and India region. There are also rather more ships open in the region, which has caused freights to drop into the $50s/t for 5,000 to 10,000t cargoes from the Middle East Gulf to the Eastern Mediterranean. Eastbound is performing well, however, especially on methanol and aromatics.

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.