Routes to Europe remain some of the tightest out of the U.S.; owners have recently earned a rate in the $70s per metric ton for 5,000 tons of styrene to Antwerp-Rotterdam-Amsterdam. A fish oil cargo of 8,500 tons from Mississippi to Ghent also paid around $70/t, which is fast becoming the yardstick against which any further August fixing will be measured.

There is so little space remaining for August too, and yet there is a long list of requirements still being quoted, including more styrene, ethyl benzene, vinyl acetate monomer, cyclohexane, glycols, phenol, ethanol, nonene, acrylonitrile, biodiesel, vegetable oil and alpha olefins. There has been some interest to ship a small volume of base oils to Havre, in addition to the cargo recently fixed.

Routes directed toward the Far East have been quieter, with many of the existing enquiries being put on hold for the moment. Styrene has been attempted, with 5,000 tons being done in the mid $60s/t, only for the deal to fail. Ethylene dichloride, ethanol and glycols are the remaining products in the frame – base oils are not.

On routes from the U.S. Gulf to the east coast of South America, vessel space has been very scarce from the end of July onwards. Until recently, there has not a great deal of fixing being accomplished. However, a raft of new enquiries has brought on berth several larger ships which can now offer part-cargo space opportunities.

Base oils in the amount of 4,000 tons were being worked from the U.S. Gulf into Brazil in the upper $70s/t, which gives a sense as to what levels to expect.

U.S. Gulf to Caribbean is another route on which vessel space is scarce and which has caused many charterers to defer shipments until such a time when there is more space available. In such circumstances, this is perhaps the best option and has been adopted by most chemical and base oil players. On the vegetable oil side, some enquiries have been repeatedly quoted for literally a month, but this tactic does little to convince owners to lower their freight ideas.

Base oils have been pushed around – from small volumes to Punta Cardon and Colombia, to yet another large chunk of base oils looking to move to Nigeria at the end of August.

A number of base oil requirements going to the India/Middle East Gulf region continue to be quoted for August, but unless there is a change in the amount of tonnage on berth, rates are probably going to stay unchanged.

Europe

The North Sea and Baltic region saw a bit of a rush for loading in the end of July, which allowed the bulk of the fleet to flip into August without much idle time. There are up to a dozen ships that are currently without employment, which some have interpreted as a signal that the market is on its knees, but this is a remarkably low number for the first week in August. There have been periods in the so-called busier winter months when there have been more idle ships than this.

Again, much of the employment has been generated by products linked to gasoline blending. Base oils have been way down on the list. Contractual nominations hold the key as to how August will fare, and it is in this area that a slowdown seems to be occurring.

The southbound market remains rather subdued and even scheduled carriers have prompt space. Bits and pieces of base oil demand are being seen. Turkey seems to be importing less volume from the Black Sea, for example, and traders have been exploring supplies from northwestern Europe and the Mediterranean as alternatives.

Rates are competitive – 6,000 – 7,000 tons of caustic was fixed from Liverpool to Marmara at $55/t, which is actually a bit higher than the last-done deal, but still low considering there ought to be a premium for going all the way to Liverpool to load.

Once again, northbound ships seem to have been able to fill up back to the continent, and in some cases, rates have been on the firm side. A shipment of 5,000 tons of aromatics from Leixes, Portugal, to Antwerp-Rotterdam-Amsterdam paid 150,000, for example.

The week brought forth quite a lot of Inter-Mediterranean material to be moved and the West Mediterranean region tightened up quite quickly. Rates are stable, bordering on firm. In the East Mediterranean, owners have been able to switch around with relative ease between clean petroleum, chemicals, base oils and vegetable oils and most ships are fixed some ways forward.

Transatlantic rates took another small hit this week as demand for space dwindled a bit further. It is far from being a total washout, however. There are still requirements of paraxylene, orthoxylene, toluene, pyrolysis gasoline, caustic, acetone, urea ammonia nitrate and base oils. Toluene in the amount of 3,000 tons was covered from Antwerp-Rotterdam-Amsterdam to Houston at $54/t but might have ended up even lower had there been more ships around on the loading dates.

Between 2,000 tons and 3,000 tons of base oils were booked from two ports in northwestern Europe to Colombia at around $140/t, which is higher than expected, considering the other ships going across. The really interesting base oil requirement is the 21,000 – 25,000-ton cargo from Livorno to Punta Cardon.

Very little is happening on the Europe-to-Far East route and contractual nominations are poor for August. It is unlikely there will be sufficient spot market volumes for all the ships and therefore rates are likely to weaken further. So far, there has not been anything yet with which to really test the rates. A 4,000-ton cargo of easy chemicals from Rotterdam to South Korea was worked in the low-mid $80s/t, which is a taste of things to come.

There is quite a bit of space around on Europe-to-India/Middle East Gulf routes, especially from the Mediterranean, where several ships have been struggling to fill. Pyrolysis gasoline in the amount of 6,000 tons going from the Black Sea to the Middle East Gulf paid mid- to high $60s/t, which should be a marker for base oil rates from Kavkaz. A 3,500-ton volume of base oils were booked from Kavkaz to Fujairah and is expected to have been at a considerably higher level.

Vegetable oil demand has lessened, however, and one of the open ships indeed has been cancelled for a vegetable oil cargo from Constanza.

Asia

The domestic Asia market is still relatively unscathed by the summer recess and the number of spot/prompt ships is a small minority of the entire fleet. Rates are under pressure nevertheless.

Northbound rates have been marked down, although this is an area where there still seems to be cargoes and it is surprising to see rates slipping. Southbound has been the market that is possibly more likely to register lower numbers.

Base oil exports from Korea into the Southeast Asia market are noticeably less. However, the clean petroleum market is very active within Asia, with strong rates reported. Some charterers are checking the possibility to move smaller cargoes on chemical tankers due to the shortage of more traditional medium range tankers.

Transpacific space is very tight for August amid good export demand for benzene, paraxylene, mixed xylenes, toluene, urea ammonia nitrate, MTBE and biodiesel. Rates are strengthening, with 5,000-ton parcels from Ulsan to Houston pushing into the upper $60s/t. Rates in the $80s/t have been seen for 10,000-ton lots to the U.S.s Atlantic coast and similar rates have been noted on MTBE movements from North China to Mexico.

Space to Europe is equally scarce. An owner claims to have fixed 5,000 tons of easy chemicals from Korea to Antwerp-Rotterdam-Amsterdam at $123/t.

Several parcels of base oils have been quoted to Europe from producers in Singapore and it will be interesting if they can achieve levels in the $80s/t as they have done on the most recent shipments. Turkish blenders also seem interested in small parcels of high-spec base oils.

The Middle East Gulf/India region is not easing up and there is quite a bit of material that is still awaiting shipment, even after a week or two of looking for space. The usual tell-tale signs are of widened laycans, or laycans that go back a week or 10 days simply because there was no ship on the original dates. In some cases, charterers end up bidding owners for space. As such, rates remain firm.

Eastbound has not seen as many larger slugs, but there are still quite a few parcels in the 5,000 -10,000-ton bracket and rates are likely to remain unchanged.

Westbound is strong (contrary to some reports), thanks to heavy demand for benzene, paraxylene, methanol, glycols and MTBE. A number of ships have taken advantage of the arbitrage to move these products to the U.S., Brazil and Europe. Rates, even for the large lots, have been in the $70s/t and $80s/t, which is higher than the reported values. Space is not readily available and owners see plenty of alternatives.

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