Rates to Europe have softened a little more, with 5,000-ton parcels more frequently in the low- to mid $60s per metric ton than in the mid- to high $60s/t. However, there has recently been good demand for glycols, phenol, vinyl acetate monomer, styrene and ethanol. There has also been some interest in shipping parcels of 3,000-5,000-ton lots of base oils to Northwest Europe. Space is beginning to tighten and it looks as though rates may be bottoming out.

U.S. Gulf-to-Far East trade has intensified further and October space is very scarce. Rates are mostly stable for November loading as owners work toward fulfilling contractual obligations and filling out on spot market business, and at this stage do not want to jeopardize the main bulk of their commitments. But with spot demand growing and some owners already seeing their contractual customers maximizing nominations, it may not be too long before theres unavoidable pressure to raise rates.

Anything that needs October loading, however, may end up paying a premium since there will probably be only smaller ships able to come on berth. There have been some attempts to place some base oils into Singapore for October, but these will be competing with the ethanol cargoes to the Philippines for space, and consequently rates may be more in the $80s/t than the $70s/t.

The past fortnight has not been a particularly exciting period going southbound to the east coast of South America. Scheduled ships still have pockets of space and demand has been lukewarm, but the overall amount of space is not that great and it would only take a few parcels for it to be soaked up. Since there are not that many spare ships in the U.S. Gulf these days, it would only take a moderate increase in demand to trigger a rate increase.

October space into the Caribbean remains limited, which has occasioned a readjustment in rates and/or delivery schedules, and for those charterers who have not modified their mind-set, it is causing quite some anxiety.

The vegetable oil market in particular is used to a certain rate level and a wide choice of vessels. There are cargoes still out there that should have shipped back in August but the charterers for these have until now totally rejected any increases. Now they are slowly but painfully shifting the backlog.

Base oils have been moving into Colombia with one cargo of 8,500 tons confirmed fixed and due to load later this month when the ship returns to the U.S. Gulf from its current voyage.

Europe

A slight improvement in both spot and contractual volumes has been detected in the North Sea and Baltic regions. Consequently, the number of idle ships has been reduced to just a small percentage of the available fleet, with some owners already starting to look to fill the last of their October space.

Products such as ethanol and biodiesel are among the more active in this region, while small clean petroleum tankers have also been able to capitalize on the cooler weather and better demand.

There is also a greater number of cargoes being transported by sea that would normally be barged internally within Europe. Low water levels in the rivers and canals have meant barges cannot load full cargoes and so more barges have been needed to the extent that some barge freights have increased dramatically.

Improved contractual demand southbound has been felt on the route into the Mediterranean, with some scheduled carriers having to relet cargoes to the spot market because they are either late or have no time to perform all the requirements.

Spot players, on the other hand, have had gaps to fill and found plenty of competition from other owners. Spot rates have therefore been weak and there have been rate reductions of at least $5/t on some parcels into the West Mediterranean, for example.

Northbound business has been rather slow over the past fortnight, yet at times there has been a bit of a scarcity of space, particularly from the West Mediterranean, and so some parcels have taken a little longer to cover. None of the rates has been above the market, however, and indeed rather more below the market.

A bit more business has opened up over the past few days, with interest in methanol, pyrolysis gasoline, benzene, C7, biodiesel, heavy aromatics and some base oils noted.

With many of the usual players absent at the EPCA event in Berlin, the inter-Mediterranean market, and indeed all around Europe, has not been at its usual pace, but equally there has not been a great deal of prompt open space either. Space in the West Mediterranean is not plentiful for sure, and even in the Black Sea there are more clean petroleum cargoes. Rates are mostly unchanged for now.

The transatlantic market has continued to periodically post cargoes of benzene, paraxylene, caustic, methanol, sulphuric acid and more lately pyrolysis gasoline. Space going over is slightly long out of Antwerp-Rotterdam-Amsterdam, but not all the cargoes are coming from Antwerp-Rotterdam-Amsterdam and these cargoes are having a harder time to find prompt space. Rates are balanced overall.

Europe-to-Far East freights have not really decreased at all, which puzzles charterers who see space available from all the main carriers on the route. Demand has been sporadic too, with bits and pieces quoted, such as butanols, acetone, ethylene dichloride and more recently some base oils to Singapore. It is almost as though owners have drawn a line in the sand, below which they would rather let business go.

It has been rather dull into the India/Middle East Gulf region, with nothing of significance quoted apart from some pyrolysis gasoline and the occasional parcel of hexane, solvent naphtha and vegetable oils. Base oils have not seen much activity at least. Rates are not really being challenged and so are stable for now.

Asia

All the main economies of the region have experienced holidays over the past couple of weeks, and it is taking some time to rebuild demand. Initial signs are a little more promising, with cool weather in the north stimulating demand for clean petroleum.

Base oil demand has been constant, unlike that of aromatics, but there are at last a few more parcels of aromatics starting to show, especially northbound. Space has also tightened somewhat, and although there are still clearly prompt ships around, there are some entire fleets that now can only look at November cargoes. Overall, rates remain flat.

Some traders argue that there is little demand for transpacific benzene, whereas others point to fixtures that have been done for both October and November loading. There is not that much open space to the U.S., but that could also be a function of lack of demand. Freight rates are hovering around usual values for the main ports, but outports are producing relatively strong numbers.

The market to Europe continues to see small parcels of speciality chemicals which pay more or less the same levels as the past few months. Looking ahead, scheduled carriers report improved contractual demand from Northeast Asia and indeed there is now only open space from Southeast Asia in October.

The Middle East Gulf/India region is often described as slow, although there are actually quite a lot of parcels around, some of which have been quoted for a week or two without being fixed. There are not that many prompt candidates in the area either, although those that are there complain of increased competition, particularly from larger clean petroleum tankers, and indeed, some of the rates from the Middle East Gulf have fallen by as much as $100,000 for 15,000-ton cargoes.

Eastbound ships are steadily filling off end of October and first half of November positions, assisted by a variety of aromatics sales from India and the Middle East Gulf. Further cargoes of ethylene dichloride, glycols, paraffins, paraxylene, MTBE, ethanol, orthoxylene and methanol have been noted, too. Rates are still soft, however.

There is some prompt westbound space available, but equally there is a reasonable selection of cargoes quoted which are keeping rates stable. There had been rumours of base oils being booked from the Red Sea to Turkey, but there may be confusion with a cargo of molasses that was fixed out of Port Sudan instead. Demand consists mostly of benzene, methanol, MTBE, cyclohexane, ethanol, paraffins, acetic acid, vinyl acetate monomer, styrene, ethyl acetate and paraxylene.

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.