SSY Base Oil Shipping Report

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Progress has been slow on routes out of the United States this week. Asian markets share the same problem, with only a few routes making headway. Europe has been relatively stable, but May is a month so full of public holidays that trade will surely suffer.

U.S. Gulf

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Just by adding up all the freight enquiries, the route into the Far East ought to be booming as there is far more demand than supply of ships. However, as in previous weeks, a large number of these enquiries are simply traders trying to get a feel for how much space there is out there, and then trying to gauge what freight levels could be achievable. Most of them do not react to the freight indications they receive, and consequently owners grow increasingly anxious and lower their rates further. This game of cat and mouse has gone on for well over a month, and rates for 10,000-ton parcels from the U.S. Gulf to China have fallen to below $50 per metric ton. The main grades that are getting fixed are the really big slugs of methanol and ethanol. A few 5,000 ton shipments of styrene and ethylbenzene have concluded too. Since much of Asia has been away this week because of extensive public holidays, this situation is unlikely to change unless the owners really dig their heels in.

Transatlantic freights have nudged upwards again this week on the basis of increased demand. Styrene and ethylbenzene are increasingly being fixed. Parcels of cyclohexane, glycol, caustic, lysine, hexamethylenediamine, vinyl acetate monomer, used cooking oil, metaxylene, acrylonitrile and cumene have been booked too. Expect to pay between $45 and 50/t for 5,000-ton parcels from Houston to Rotterdam.

There is a requirement along the route into the Caribbean to ship 1,900 tons of base oils into Rio Haina, Dominican Republic, for which several traders are seeking freight ideas, but the week seems to belong to caustic. Caustic has been quoted into Mexico, Matanzas, Cuba, Colombia and Montreal, while 2,000 tons of caustic was fixed from Houston to Rio Haina in the low $50s/t.

After last weeks excitement, it is back to basics for the route into the east coast of South America this week, with the usual ethanol and caustic noted, along with some palm oil from the Caribbean into Brazil.

Ethanol in varying sizes to India is probably the core ingredient along the India and Middle East Gulf route this week. Three thousand tons of base oils were booked from Houston to the west coast of India for the second half of May.

Europe

Again, the market into the North Sea and Baltic cannot be described as buzzing, yet there are not many prompt candidates around. May Day is an extensive public holiday throughout Europe, and will be followed by a host of different religious or national days for the rest of the month, which is expected to curtail activity. Base oils have been among the more active products, with material noted coming down from the Baltic. Ethanol and biodiesel shipments have picked up the pace, but are still far short of their usual seasonal quantities. Tankers dealing in the small clean petroleum market are not having too bad a time either.

Quite a lot of cargo has been fixed southbound into the Mediterranean, with the result that a number of ships are now hunting for completion possibilities, which has given rise to some competitive freights being given out. Five thousand to six thousand tons of pyrolysis gasoline from Dunkirk, France, to Priolo, Italy, for instance, fixed at $115,000 to $120,000 as the completion cargo on a ship fixed with biodiesel to Gaeta, Italy. Traders are looking at base oils to a variety of destinations in the Mediterranean and Black Sea.

Northbound cargo volumes remains steady, with pyrolysis gasoline still of special interest. Ten thousand tons of pyrolysis gasoline was booked from Kulevi, Georgia, and 3,000 tons fixed from Aliaga, Turkey, and a further 2,500 tons was picked up from Venice. More pyrolysis gasoline has been mentioned looking for space from Berre, France, and Rijeka, Croatia.

Activity remains subdued along the intra-Mediterranean route, yet there is not much by way of prompt space. Base oil movements are plentiful, with cargoes being sent to Morocco, Egypt, Greece, Turkey, Israel and Spain. Caustic has been reasonably busy, and biodiesel has been slightly more interesting this week.

Transatlantic activity levels remain quite high, which is illustrated by the substantial amount of tonnage that has been booked across over the past few weeks. Not only has there been a strong showing by scheduled carriers, but a large number of additional ships have found cargoes to take. As a result of course, the extra competition has driven down rates that would otherwise have been much higher than they are. Much of this extra demand has been kept under the radar too, but it includes shipments of pyrolysis gasoline, benzene, toluene, xylene, paraxylene, caustic, urea ammonia nitrate, ammonium polyphosphate, sulphuric acid, acetone, biodiesel, aniline and wax. Base oils have been towards the back of the queue, with only small parcels noted.

Base oils are being talked about to Singapore and Korea, but the 5,000 tons that was quoted last week to Singapore was mis-described as base oil when in fact the cargo was lard. Interestingly, phenol has been quoted this week along the Far East route, which has not been seen for some time. Four thousand tons of perchlorethone was quoted from Stade, Germany, and there has been talk of some ethylene dichloride too.

Prompt pockets of space can be found into India and the Middle East Gulf. Traders have been talking of base oils to both destinations, and there have been cargoes such as acrylonitrile, hexane and solvents. Rates are generally unchanged.

Asia

With Golden Week taking place in Japan, and plenty of countries celebrating May Day, activity on the domestic route has been sporadic. Interestingly, more business has been circulated in the Northeast Asia region. This area has been under a lot of pressure recently, and it is encouraging to see the big slugs of paraxylene being quoted into China again. Benzene, styrene and mixed xylenes have also been seen on the same routes. Base oils, however, have not stood out in this area. Some small shipments of base oil have been noted on the southbound leg, and 2,000 tons of base oil were heard to be fixed from Cilacap, Indonesia, to Port Klang, Malaysia, at around $45/t. Acetic acid from China and Taiwan to Southeast Asia has been of interest, while northbound has produced a slight improvement in demand. Cargoes of paraxylene, pyrolysis gasoline and mixed aromatics are noteworthy, with 4,000 tons of pyrolysis gasoline from Thailand to China reportedly fixed in the low $30s/t.

Space is already pretty tight for May on the Transpacific export route, with ships even booked through the first half of June. Benzene shipments to the U.S. are rife right now, with 12,000 ton to 15,000 ton cargoes fetching high $40s/t. Base oils have interestingly been noted, with 9,000 tons quoted from Singapore to Houston for prompt loading, and a further 10,000 tons to be shipped in June. Cargoes of sulphuric acid, acetone and aniline have also been seen. The market to Europe is dominated by cargoes of biodiesel, ranging from 6,000 ton parcels to 20,000 ton slugs. Ten thousand tons of solvents from China to Turkey were booked at $95/t, though the ship is running behind schedule and may have to be replaced with a more expensive one. The 15,000 tons base oils shipment from Singapore to Rotterdam from the previous week ended up paying around $760,000 to $770,000.

One week on, and the regional markets along the India and Middle East Gulf route have recorded a much busier week. Base oils are fairly active out of Iran, Al Ruwais, U.A.E., and Yanbu, Saudi Arabia. Traders are looking at 6,000 tons of base oils from Al Ruwais to Ulsan on the Eastbound route, but space is tight in that direction for May. Fifteen thousand tons of paraxylene from Sohar, Oman, to China fixed at $40/t, for instance, with plenty of shipments of aromatics, methanol, glycol, styrene, caustic, ethylene dichloride, ethanol and methyl tertiarybutyl ether noted. Westbound continues to see benzene quoted to the U.S. and Europe. Twenty thousand tons of caustic from Mesaieed, Qatar, to Jamaica was an interesting possibility.

Adrian Brown is a senior market analyst for chemicals and base oils with SSY Shipbrokers, London, can be reached atfix@ssychems.comor +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.

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