Very little happened in the U.S., primarily due to the shortage of space. Europe was quiet for similar reasons, while Asian markets were doing their usual routine of pretending to be quiet but really producing quite good levels of employment.
U.S. Gulf of Mexico
It seems a little ironic, but hardy anything of great note happened in the U.S. market over the past week. This does not mean that there were no potential deals or enquiries. Quite the contrary, there have been lots of cargo opportunities, but it is just that the U.S. is devoid of prompt space which has meant only a handful of fixtures across all routes.
U.S. Gulf-to-Far East for example has been crying out for prompt ships, and various small vessels have even come on berth against full cargoes of aromatics. They have not been particularly cheap, with numbers around $110/t talked for 10,000 ton parcels from Houston to one port in China for example. However, this small pool of outside tonnage is dwarfed by the scale of demand.
Traders too are conscious that paying more on the freight to avoid paying year-end tax on inventory is not always the most economic solution, and some are taking a rain check before pursuing any further business.
Transatlantic eastbound continues to see a number of large ethanol requirements, but with few ships available to service them, few of these cargoes will end up being fixed. Rates are therefore assessed as notionally unchanged on this route, and also on the other main trades such as Gulf-to-Brazil and Gulf-to-Caribbean. There are a couple of ships with November space from the U.S. Gulf to the east coast of South America, so it may be possible that a benchmark freight level is set later this week. Gulf-to-Caribbean however is just about completely full, with only the occasional bit of space left.
Europe
There was probably less business concluded over the past week than the week before. In the case of Europe-to-Asia, it is probably the lack of available tonnage that has meant fewer fixtures. Demand remains strong to Asia and India, and this is causing freights to stay firm.
Typical numbers for 5,000 ton parcels from Rotterdam to China are in the mid $90s/t, but such levels are causing traders to suggest they will look elsewhere to source the product. This past week has been an opportunity for both sides to catch their breath. If demand does stay buoyant however, there is every chance that freight rates will rise further, but if not, then they will probably roll on at unchanged levels to year-end.
Europe to India-MEG has experienced some tightness in space over the past week, and freights have been climbing. From Rotterdam to the west coast of India, 2,000 ton parcels of base oil are probably priced in the very high $90s/t currently.
Transatlanticwestbound continues to attract traders who want to send base oils across. There has been some interest in benzene too, but the rates reported for 10,000 ton cargoes at $39 to $40/t have scared off most of the traders who see no arbitrage at those levels. There are not very many ships around or looking at going on berth, so it does mean that freights are not declining. It just hinges on how much real demand comes through as to whether levels will wobble or not.
European coastal markets have been stable. North Sea business is mostly routine, and rates are unchanged. There is a shortage of tonnage in the western Mediterranean that may cause levels to lift slightly, but otherwise everything else looks steady in the Mediterranean.
Asia
Certain routes within Asia are performing very well. One such route is the inter-Far East trade where Chinese demand is still very much in evidence. Comprised mostly of aromatics such as benzene, toluene, mixed xylenes and paraxylene, there are also some solvents, glycols, caustic and ethylene dichloride to be seen. Space has been quite tight in this area, although we are beginning to hear of Japanese owners pulling their ships away from the slack northbound route which should help alleviate the tightness. On the other hand, some of the Korean owners are starting to withdraw their ships to the busier domestic clean trade for the duration of the winter, so balancing the supply of tonnage again.
Export business has gone a little quiet in terms of acid and benzene, but palm oil and biodiesel continue to absorb nearly all the spare tonnage in the region. Rates are steady on these cargoes. The Middle East Gulf-India markets are tight on the westbound run, but eastbound can produce prompt space, keeping freight rates low.
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.