Markets in both the United States and in Asia have been subjected to increased demand which, in turn, has caused freights to strengthen. Europe, however, has been very slow, and freights are softer.
Rates into the Far East have increased by at least 10 percent to 15 percent over the past week and are expected to continue climbing as space becomes even tighter. Nine thousand tons of glycol from Houston to Yangtze River, China, was fixed at $60 per metric ton and 10,000 tons of paraxylene from the U.S. Gulf to South China secured close to $70/t. Some of the ethanol cargoes being fixed to the Philippines are paying even higher rates for quantities of 15,000 tons. Not much space exists for November, and owners are already receiving December nominations, which suggests that this may be a combination of year-end inventory shift occurring simultaneously with Chinese demand in advance of the lunar holidays in February.
Owners are pushing for a rate increase on the eastbound transatlantic route, with figures of $60/t bandied around for 5,000-ton lots. However, there are still several prompt ships that have got some space to fill and could thwart owners attempts to secure an increase, at least for one more week. Styrene is being pushed heavily into the East Mediterranean, but there is hardly any space left to take it. The 6,000 tons of base oils from Houston to Antwerp-Rotterdam-Amsterdam that were quoted last week ended up on contractual tonnage in the end.
Space can be found in the U.S. Gulf to Caribbean market, whether loading promptly or later in November. However, the clean petroleum market recently spiked, and it is conceivable that charterers may come looking for even smaller chemical ships to help them fulfil all their clean petroleum requirements. Staying on that theme, Colombia recently raised its blending mandate, which is expected to generate more imports into Colombia.
Ethanol has made a return on the southbound route to the east coast of South America, and rates are quite strong. Sixteen thousand cubic meters of ethanol from Texas City to north Brazil cost $800,000, while another 15,000 m3 to two ports in north Brazil yielded $52/t. Rates for smaller parcels, however, are still pretty competitive. A parcel of 3,700 tons of base oils were covered from Pascagoula, Mississippi, to Rio de Janeiro, and 4,500 tons of base oils were heard to have shipped from the U.S. Gulf to Argentina, but otherwise there has not been much else.
Space is a bit tighter into India and the Middle East Gulf, and owners are pushing for mid $60s/t for 5,000-ton parcels from Houston to Mumbai. An owner is contemplating putting an extra ship on berth, and were that to happen there could well be some parcel space available.
Some owners have been able to report a slight uptick in the amount of contractual volumes being carried along the North Sea and Baltic route, but generally most owners concur that the spot market is very slow right now. Biodiesel, one of the main constituents has slowed dramatically. Base oils have not been very busy either, with virtually nothing new reported out of the Baltic.
Southbound freight levels have become very competitive as too many owners chase too few cargoes. Six thousand tons of pyrolysis gasoline from Dunkirk, France, to Priolo, Italy, was reported to have gone at 25/t, when a more usual level would be 35/t. Five thousand tons of methyl tertiary butyl ether from Rotterdam to Greece was fixed at $46/t, on the basis of direct sailing on a larger vessel. Base oils have been low-key into the Mediterranean.
Aromatics have helped keep rates steady on the northbound route out of the Mediterranean. A couple of 7,000-ton cargoes of biodiesel have been booked from Varna, Bulgaria, to Rotterdam, which is an interesting development for owners as it provides them with an alternative to vegetable oil when they have ships open in the Black Sea. It has been a quiet period for new base oil requirements going north.
The inter-Mediterranean market gives the appearance of being slow, yet there has been a shortage of prompt space in the West Mediterranean for several days, and a number of cargo requirements have been in limbo, waiting for offers. Because the market is generally perceived as weak, however, owners have been willing to accept very competitive levels. Base oil exporters from the Black Sea are expecting to have a greater choice of tonnage soon as ships that have been trading in the Russian river systems over the summer should be returning to the sea as ice closes down the rivers. Even more tonnage could become available as some of the chemical plants that use gas as a feedstock could find their gas supplies being diverted to domestic heating over the winter.
The westbound transatlantic route remains sluggish with plenty of open space and too few firm requirements. A number of benzene cargoes were attempted through the week, but almost all failed to materialize. Ten thousand tons of biodiesel from Hamburg, Germany, to the U.S. Atlantic Coast was targeting levels in the mid $20s/t, when last-done had been in the low $30s/t. Six thousand tons of paraxylene from Rotterdam to the U.S. Atlantic Coast was put on subjects in the mid- to high $20s/t. Three thousand tons of aromatics from northern France, to the U.S. Atlantic Coast were fixed for around $50/t, and 12,000 tons of sulfuric acid from Aviles, Spain, to Savannah, Georgia, fetched mid $20s/t.
No great changes have been reported on the route into Asia. November space is beginning to look top-heavy unless more demand appears. There are some base oils still pending for later in November, while 10,500 tons of base oils to Singapore are believed to have cost $800,000 basis from three loadports.
There are still a couple of ships with space left on the India and Middle East Gulf route, which might cause freights to wobble. Reports of 6,000 tons of pyrolysis gasoline being done from the Black Sea to the Middle East Gulf in the high $60s/t turned out to be incorrect, with the cargo not being booked after all. Eight thousand tons of base oils were booked from Rotterdam and Livorno, Italy, to Mombasa, Kenya.
The intra-Far East route has been a real hotspot all week, with numerous cargoes quoted. Space is tight, with most fleets booked through mid-November at the earliest. Freight levels continue to edge upwards, with 3,000-ton cargoes from Ulsan, South Korea, to mid-China now commanding $24-26/t. Space has also become tighter on the southbound leg, partly because owners are doing so well by keeping their ships in the Korea-China-Taiwan triangle. Most routes out of Southeast Asia are doing well too. It had been expected that the palm oil market to India would shrivel after Diwali, but this seems not to be the case for now, with plenty of prompt cargoes noted.
There is not a great deal of space on the transpacific east export route. Benzene has resurfaced, but traders are looking to achieve mid $30s/t, and are consequently quoting larger cargoes than normal in an effort to achieve those levels. Acetic acid is another grade that has seen much activity due to a plant issue in the U.S. Five thousand tons of acetic acid was booked from Taizhou, China to the U.S. Gulf at $92-93/t, and an even larger lot went for a much higher sum. A 12,000 ton shipment of base oils were booked from Singapore to Houston in the mid $60s/t. Acetic acid is also moving to Europe, with 15,000 tons fixed from China to Antwerp-Rotterdam-Amsterdam at just over $115/t. Cyclohexane and used cooking oil are the other grades currently in demand. No new base oils have been seen to Europe so far.
It seems to be active in the regional markets, but owners are finding that a lot of inquiries for the India and Middle East Gulf route are not firm or have unrealistic freight ideas. There have been quite a few attempts to ship base oils from Iran and the Middle East Gulf into India, and it would seem there are base oils being moved from Pakistan to India. On the eastbound leg, contractual volumes are healthy. A 10,000 ton requirement from Al Jubail, Saudi Arabia, to Southeast Asia received indications in the low $50s/t, which is about $10-15/t higher than expected, while 16,000 tons of methanol was worked from Sohar, Oman, to Kerteh, Malaysia, in the high $30s/t, and 20,000 tons of benzene, toulene, and xylene from the west coast of India to Far East was done in the mid $30s/t. Westbound space remains tight for November, and rates are firm to Europe and the U.S.
Adrian Brown is a senior market analyst for chemicals and base oils with SSY Shipbrokers, London, can be reached firstname.lastname@example.org +44 12 0750 7507. Information about SSY can be found atwww.ssyonline.com. In the Houston office,Steve Rosenthalof SSY’s Chemical Tanker Department can be reached directly at +1 (713) 652-2700 and Jordi Maymi in Singapore can be reached at +65 6854-7127.