The market from the United States to Asia has come alive for December, but other U.S. trade lanes are static. European markets are fractionally busier and Asian domestic markets are stronger, even if export markets are not.
U.S. Gulf
Not much happened in the U.S. in the day or so leading up to the Thanksgiving holiday, but there has been a lot more activity on the U.S. Gulf to Asia route since the holiday. Some had predicted the market would soften to $90 per metric ton or lower for 5,000 ton quantities from the U.S. Gulf to Mainport Far East, but instead, stronger demand has spurred owners into quoting rates of $105/t for 10,000 ton quantities. Styrene, aromatics, glycols and phenol are the big movers, whereas there has not been much evidence of base oil shipments.
Instead, there has been interest in shipping base oils from the U.S. Gulf to India in December, although a shortage of vessel space may make this difficult to achieve. An amount of 12,000 tons of base oils has also been fixed from U.S. Gulf to Nigeria for December.
Base oils are also said to be showing on the U.S. Gulf to the east coast of South America run. Rates are stable on this route, being in the mid $70s/t for 5,000 ton parcels from Houston to Santos.
Transatlantic eastbound is rather slow and several ships require completion parcels, which means that rates could slip even below $50/t in some instances for 5,000 ton quantities going from Houston to Rotterdam.
Europe
The amount of material being shipped in the North Sea and Baltic is not disappointing, but it still falls short of what can be expected for this time of year. Some larger-than-normal base oil shipments have been detected taking place from the Baltic and rates are firm in the region.
Southbound into the Mediterranean is also quite busy and there have been more instances of owners turning away business. Base oils have been noted looking for space into the East Mediterranean. On the whole, rates are unchanged.
Northbound numbers tend to be close to existing levels, although date-sensitive cargo may attract a big premium. An amount of 10,000 tons of clean petroleum from the west coast of Italy to Antwerp-Rotterdam-Amsterdam went in the upper $40s/t, for example, when a more usual rate would be low-mid $30s/t.
Inter-Mediterranean demand remains sizeable and, rather than all chasing the same requirement, owners have a better range of options regarding what to do with their ships. This allows the owners to be a bit more bullish in their rate ideas.
Transatlantic westbound has been full of trader enquiries looking to ship pyrolysis gasoline to the U.S. Gulf. Rates, however, are all over the place. Some 5,000t cargoes are claimed to have fixed in the low $40s/t while others have been booked in the mid $30s/t. Other parcels are still at the enquiry stage, but tagged by the charterers as willing to fix in the mid-high $40s/t. This is a route very much driven by what ships are on berth on the dates that the cargo has to be shipped.
The Europe to Asia route is really tight on scheduled space, but there are additional vessels that have gone on berth and have still to fill up. Rates are stable to firm. Base oils are not looking to go this far east, but there have been enquiries into India and the Middle East Gulf. Rates appear to be strong at the moment because there are a lot of vegetable oils and acids being shipped, the rates for which are strong. Easy chemicals and base oil parcels of 5,000 tons from Rotterdam to west coast of India are not far off from $80/t. Vegetable oil parcels of 5,000 tons from Black Sea to Iran can command levels of mid $70s/t.
Asia
There has been a positive amount of new business recorded in the domestic Asia markets and some ships are now showing up in January positions. Whereas a month or so ago charterers could easily find sufficient tonnage on their desired dates, nowadays it is much more common for them to widen the loading dates in an attempt to ensure a better choice of tonnage and to keep the rates from lifting. Cargoes are also being quoted for longer in the market before eventually being booked. These are the little signs that give away the real situation.
Base oils have been aplenty, with lots of movements reported in all directions, again contrary to what some would want the market to believe. Rates are tracking upwards, but not to any great extent. Base oils in the amount of 3,000 tons from Korea to mid-China would normally see freights in the mid $20s/t, but this level is being challenged and could rise by a dollar or so.
A number of base oil enquiries have been detected from Asia into India and the Middle East Gulf, and while rates have not really gone much into the $50s/t for 5,000 ton parcels, there is a chance that these levels will creep upwards.
Asia export markets have been fairly tame, no doubt caused in part by the softer demand for palm oils which have clearly been losing ground to soybean oil and sunflower seed oil from the Black Sea.
The Middle East Gulf to India market has been steady with unchanged rates seen both eastbound and westbound. The main news is, of course, the relaxation of sanctions against Iran and what this will mean for the market. In all likelihood, it will take time to show itself, but the feeling is that freights from the region will more likely increase rather than decrease over time, due to the greater demand for vessel space. Although for Iranian base oil exporters, it should signify lower costs than those paid currently.
Adrian Brown is senior market analyst for chemicals and base oils with SSY Shipbrokers, London. Information about SSY can be found atwww.ssyonline.com. Adrian Brown, in the U.K., can be reached atfix@ssychems.comor by phone at +44 1207-507507. In the London office SSYs Jordi Maymi can be reached atfix@ssychems.comor +44 20 7977 7560.
