As is the case with all the trade lanes out of the U.S. Gulf, very little has occurred over the past week since many offices closed or began preparing for Independence Day from the middle of last week. This has not caused any particular hardship on the eastbound transatlantic route, since there was very little open space anyway, and actually one of those ships was looking for a cargo to replace a cancelled cargo of base oils to help mitigate a deadfreight claim.

Several further parcels of base oils have been marked as fixed over to Europe, one of which was a cargo of 3,200 tons to Havre, which reportedly was worked at $67 or $68 per metric ton. The rate is rather competitive given that other owners were talking considerably higher levels. Styrene interest has waned, but instead there are cargoes such as glycol, acrylates, propylene tetramer, ethanol and used cooking oil methyl ester.

Styrene has been the buzzword on the route to Asia, but in effect there is so little July space unaccounted for that many of the cargo enquiries are slipping back into August. Several large slugs of ethanol have been booked too, with further enquiries still outstanding. On the face of it, rates should be shooting up, but in essence there has not been any space around for the levels to be tested which means that rates remain notionally unchanged. This is fertile territory for an outsider to come on berth and set the benchmark.

Theres also been no real change on routes from the U.S. Gulf to the east coast of South America. Space remains extremely tight on scheduled carriers until the back of July, which provides ample scope for outsiders to come on berth and drive up rates, as was the case last week with the 17,500-ton base oils/chemicals combination to Brazil and Argentina that ended up paying around $70/t. Ethanol is being attempted, but so far it has not brought any additional space to this beleaguered route.

Tightness prevails in the U.S. Gulf-to-Caribbean region too, although the lengthy public holiday in the U.S. has at least meant very few new additional cargo requirements to stretch the limited resources available. Many of the same base oil enquiries that were around before the holiday will still be around, namely into Mexico, Dominican Republic and Colombia.

An additional cargo of 7,000 tons of base oils has been quoted from the U.S. Gulf to the Great Lakes and attracted an offer of $120/t, although such a level is unlikely to be agreed upon.

On shipments from the U.S. Gulf to the India/Middle East Gulf region, mention has been made of cargoes of ethylene dichloride, ethanol and base oils this week, but trade has been half-hearted and nothing has come to fruition so far. Rates remain notionally unchanged.

Europe

The North Sea and Baltic region has encountered a reduction in clean petroleum trade, but – almost perversely – the demand for all the components that go into making gasoline are still very much in evidence and are one of the mainstays of the chemical tanker fleet at the moment. The majority of vessels have secured onwards employment of at least a week, up to 10 days, with some vessels now reported to be covered until the end of July or early August. If the summer calm does eventually occur it will not have been so severe this year as it has been in previous years.

Base oils continue to be quoted out of the Baltic, and there have been a number of spot requirements in the North Sea area too.

On southbound routes, each week seems to bring about a reversal of the trend of the preceding week, with this week seeing less demand for parcels into the Mediterranean. There are some larger cargoes, such as FAME, MTBE, ETBE and caustic, but smaller ships may find it harder to find cargoes to take back and so freights may wobble and fall. A couple of base oil cargoes have tentatively been looking to ship to North African destinations.

Northbound demand has come off slightly and space has become easier to find in July. Biodiesel has still to be one of the most active commodities, with a range of other products, such as aromatics, ETBE and urea ammonia nitrate being fixed.

In spite of Ramadan causing a slight reduction in trade to Turkey and North Africa, overall Inter-Mediterranean demand is still quite buoyant. Prompt space is particularly scarce in the West Mediterranean, where a substantial amount of biodiesel is being traded, and some higher levels have been recorded this week. For instance, 2,000 tons of easy chemicals from southern Spain to the west coast of Italy were worked at 80,000 instead of the more usual 70,000-75,000, simply through lack of space. For a while, clean petroleum demand into Greece was strong as traders sought to replenish stocks, just in case. Equally, some vegetable oil traders had to call off some sales into Greece because the customers were unable to secure credit.

The transatlantic market has produced a steady amount of business, but rather more in the way of ships looking for completion cargoes in July. Several further cargoes of paraxylene were booked, all paying in the mid- to high $40s/t basis 5,000 tons from Antwerp-Rotterdam-Amsterdam to the U.S. Atlantic coast. Owners have been indicating and fixing on parcels of orthoxylene, urea ammonia nitrate, nutriox, aromatics, sulphuric acid, solvents and some base oils.

Additionally, base oils have been looking at going over to Colombia from Europe. One of the news agencies forecast that MTBE should be moving, but to date nothing has made an appearance.

Mediterranean-to-U.S. Gulf has been very quiet this week and a fair amount of prompt space should provoke more competitive freights, should there be any base oils to be moved.

It has been a very dreary week on Europe-to-Far East routes, with just a few small parcels noted. One of the rare fixtures has been for 4,000 tons of base oils from Antwerp-Rotterdam-Amsterdam to the Yangtze River. Rates notionally continue to slide, and it may take a firm requirement to see how low they could go.

Rates remain rather soft on routes from Europe to the India/Middle East Gulf region since several ships still have part-cargo space possibilities in July. A 10,000-ton cargo of ethylene dichloride has been quoted from Stade, Germany, to India, and traders have been checking rates on ethanol from the Mediterranean. Some base oil opportunities have also been noted, including 10,000 tons from the Baltic into the Middle East Gulf.

Asia

Some owners have felt that the overall amount of domestic Asia business has declined this week. Nevertheless, there are hardly any really prompt ships, with the majority of ships being fixed ahead by 1-2 weeks. Owners somehow feel nervous all the same. There is a misconception that summer has to be quiet and they are therefore more willing to discuss lower rates.

On the southbound route, spot trades are allegedly thin, yet this week there has been much more variety in the types of cargo quoted, which include things like caustic, base oils, acrylonitrile, phenol, acetone, ethylene dichloride, sulphuric acid, MTBE, ethanol, C5, clean petroleum and solvents. Rates are under downward pressure in spite of this.

Northbound is said to be strong for July and many of the regular carriers are already full, so rates are rising. Rates for 3,000 tons of base oils from Ulsan to Singapore are down to $30/t-$31/t, whilst 3,000-ton parcels from Singapore to Korea have risen to $50/t-$52/t.

Space has been steadily tightening on the route to the U.S., yet rates on the benzene cargoes that have been concluded show unchanged levels in the upper $50s/t. Rates may climb into the $60s/t should more material need to be moved.

Rates to Europe are a bit mixed. Only a few ships have July space into the Mediterranean and rates have risen by $5/t or so over comparable June fixtures, whereas rates have decreased by up to $5/t on cargoes to Antwerp-Rotterdam-Amsterdam.

Base oil interest is negligible to either destination, but there are base oils being quoted to India. Most owners view this market as strong and indicate rates of $60/t-$65/t for 5,000-ton cargoes of base oils from Korea to Mumbai, for instance, although there have been instances of certain owners willing to entertain numbers around $57/t for this volume.

Palm oil cargoes continue to be pumped into India, regardless of the monsoons and Ramadan, keeping rates firm. Low $40s/t, for instance, has been seen on 14,000 tons from east Malaysia to the west coast of India. Until a decision has been reached with regards to Indonesian export taxes, traders will continue to send cargoes to both India and China. Implementation had been due by July 16, but it seems to be heading for a further postponement. Deep-sea demand is stable and so are rates.

Local trades between India and the Middle East Gulf continue to be very busy and rates are strong.

Theres a substantial amount of westbound demand too, with only a couple of prompt candidates. Eastbound is less frantic than westbound, but rates are nevertheless still strong.

Adrian Brown is a 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 12 0750 7507. In the London office SSYs Ian Roberts can be reached at fix@ssychems.com or +44 20 7977 7560 and in Singapore Jordi Maymi at +65 6854 7127.