U.S. Gulf of Mexico
A small bump of activity was reported in the U.S. Gulf-to-Caribbean market, with small parcels of chemicals and vegetable oils noted. All the same, we see ample tonnage available within the region, and so freights are stable.
Demand to Brazil and Argentina is fairly strong and warrants a slight increase in freight assessment. A 5,000 ton cargo from Houston to Santos has moved into the mid-to-high $60s/t. Base oils, methanol, ethanol and caustic are currently looking for space.
Transatlantic eastbound has probably seen freights dip slightly this week due to the uncertainty over tax credits for ethanol. A few August ethanol cargoes are visible to Europe, but none have been booked so far. Aromatics and styrene have shown their hand to Europe, but only in small quantities.
U.S. Gulf-to-Far East is well supplied with open space for August, and rates continue to weaken for simple cargoes. Unscheduled ports and cargoes that require special handling are much dearer to cover, there being up to 50 percent premium on the rate for them. For example, 5,000 tons of aromatics from Houston to main Far East ports fixed at $58/t, whereas a similar-sized parcel of phenol from an outport went in the mid $70s/t.
U.S. Gulf-to-India is tight on August space, the main players either unable to offer a sailing in August, or are heavily contracted out for the month already.
Europe
The small tanker clean petroleum products markets in Northwest Europe and the Baltic are horrible at the moment, but the chems side is trading fairly well. Spot volumes are down slightly, but this is normal for the time of year. Fewer base oil cargoes have been detected, whether within the North Sea-Baltic or southbound into the Mediterranean, perhaps a reflection on waning demand. Benzene, paraxylene, MTBE and acrylonitrile have all been present southbound however, and freights are fairly firm.
Northbound business is pretty constant too, while inter-Med routes have seen yet another week of impressive demand. There is hardly any prompt space to be had in the region. Clean petroleum products, chems and vegoils have all been active, with a few base oil cargoes shipping out of the Black Sea, and traders lining up a few more base oil shipments to Egypt. Freights are certainly stronger within the Med.
Demand transatlantic westbound is poor, but by itself, that is not the problem. What has happened is that Europe is brimming over with ships and they have to go somewhere. A large number of them have latched onto business into the U.S. Unfortunately, the cargoes are rarely large enough to fill the ships, so instead of five full ships there are upwards of ten ships, all with part-cargo space, and now all needing a balance cargo to fully complete.
The result is that freight rates for the balance cargoes have fallen through the floor, with rates as low as low-mid $30s/t known to have been done for 5,000 ton parcels from Rotterdam to the U.S.
Europe-to-Far East is flat in terms of spot demand, and there are scheduled vessels with space in August. It would seem a shipment of base oils has managed to fix from the Black Sea to Southeast Asia, but few traders are looking at sending base oils to any destination east of Suez right now.
Asia
Domestic Asian markets are running at about the same speed as the previous week. Inter-Southeast Asia trades are busy with a lot of aromatics cargoes seen, and space is limited. Northbound has some demand for aromatics too, but there is space available for the majority of parcels. Southbound is dull, although there are a few fresh styrene and benzene/toluene/xylene requirements just starting to appear, while more aromatics, paraxylene, styrene, caustic and speciality grades are quoted on inter-Far East routes.
Asian exportdemand is steady, with large lots of sulphuric acid and biodiesel noted moving to Europe and the Americas. Benzene is anticipated to ship to the U.S., but so far has yet to fully materialise.
Asia to India and the Middle East Gulf is fairly firm, chiefly because of competition for space from the palm oil market. Several large lots of base oils have been quoted from Korea to India, and there have been enquiries for toluene, styrene and solvents. Palm oil rates however lead the field in this direction, with reports of 25,000 ton cargoes fixed from the Malacca Straits to the west coast of India at $35/t and some slightly smaller quantities fetching high $30s and low $40s/t. Business has slumped out of the Middle East Gulf-India region, at least on eastbound routes. Westbound is still reasonably solid and space is not so prolific.
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.