SSY Base Oil Shipping Report

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U.S. rates to Asia are shooting up, but are stable to other destinations. Europe is more active on all fronts compared to last week, while Asia is regarded as slower.

U.S. Gulf

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There seems to be no inhibitions about Asia buying U.S. chemical products for the time being. Material to the Far East is flowing out of the U.S. as fast as ships can be found to transport it. Scheduled space is almost all accounted for, and so ships are being encouraged to come off other routes to go to Asia instead, and in some cases, ships that are in European waters are being approached.

Freight rates are climbing rapidly as a result. Five thousand tons of acrylonitrile from Point Comfort, Texas, to Korea was fixed at $75 per metric ton for January loading, while 14,000 tons of acrylonitrile was fixed for early February at $76/t. Ten thousand tons of paraxylene from the U.S. Gulf to China is reportedly booked at $80/t. Ethanol, methanol, phenol and ethylene dichloride are the other main attractions. Styrene, however, is subdued as news is expected as early as February on the direction of an anti-dumping duty that is to be applied by China on U.S. (and some Asian) styrene supplies.

Owners say that styrene is actively being quoted to Antwerp-Rotterdam-Amsterdam and the Mediterranean this week, though fixtures are scarce. Rates are holding in the mid- to high $40s/t for 5,000-ton parcels to Rotterdam, and perhaps mid $70s/t into Turkey. Six thousand tons of metaxylene from the U.S. Gulf to Algeciras, Spain, is reckoned to have cost $60/t. Base oils are missing from the transatlantic route entirely.

The level of demand along the Caribbean route is not particularly great, and there is a scattering of prompt open space. Several traders have been looking at sourcing base oils in the U.S. Gulf to cover the tender into Punta Cardon, Venezuela, but nothing has been done so far. Ships have gradually been filling through a combination of caustic, ethanol, palm oil and molasses, with some smaller parcels of acetone, toluene and mixed xylenes into Mexico.

Without doubt, ethanol is the primary grade being shipped southbound to the east coast of South America. Base oils in the amount of 8,150 tons were booked from Houston and Pascagoula, Texas, to Rio de Janeiro, Brazil, while 10,000 tons of paraxylene from the U.S. Gulf to Suape, Brazil, was heard to have been worked in the usual low- to mid $40s/t. There are several opportunities to secure competitive freight on ships that have part-cargo space into Brazil.

Base oils are one of the main commodities on the route to India and the Middle East Gulf. Fifteen thousand tons of base oils were worked from the U.S. Gulf to the west coast of India for one charterer, but there are possibilities to combine further cargoes to make a really huge shipment. Rates in the low $70s/t have been seen for 5,000-ton parcels to Mumbai. Large cargoes of ethanol and ethylene dichloride have also been seen, as well as phenol and acrylonitrile.

Europe

An increase in cargo volumes along the North Sea and Baltic route was reported by owners this week, making the region look more normal in terms of the supply/demand balance. The range of grades being quoted is fairly extensive, with most commodity groups represented. Base oil activity is gradually settling down, though, after a lively start. Ice in the Baltic is still not an immediate concern, with water temperatures still above freezing, although a forecast for a cold spell of weather will see even daytime air temperatures dropping below zero for most of the week ahead.

An improvement in southbound spot demand has also been noted into the Mediterranean this week. Not all rates have been firm, however. Five thousand tons of biodiesel from Antwerp-Rotterdam-Amsterdam to Sete, France, was booked at just 25/t, while 5,000 tons of easy chemicals from Rotterdam to Gebze, Turkey, paid high 30s/t. The range of grades, however, has widened, so there are cargoes of urea ammonia nitrate, caustic, styrene, orthoxylene, biodiesel, pyrolysis gasoline and acrylonitrile. Base oil is less active.

Northbound traffic this week saw greater emphasis on larger cargoes, such as alkylate, reformate, pyrolysis gasoline and C7, while more usual cargo sizes include products such as phosphoric acid, caustic, benzene and toluene. Base oils are all largely routine at the moment.

One or two prompt positions remain in the Mediterranean, but overall, most ships have been able to build a reasonable forwards program. Rates are mostly static, however. Base oils have produced a number of possibilities this week throughout the Mediterranean, with cargoes moving from the Black Sea, Greece, Italy, Spain and Portugal.

Space is a little tighter westbound for January, which has boosted freight levels slightly. Ten thousand tons of paraxylene from Antwerp-Rotterdam-Amsterdam to the U.S. Atlantic Coast went at $34/t, while another owner worked the same volume for another account at $28/t-$29/t. That deal, however, failed to materialize, leaving 5,000 tons to be quoted for later loading. Further parcels of paraxylene have been quoted, as well as toluene, mixed xylenes, acetone, aniline, acetic anhydride, pyrolysis gasoline, caustic and sulphuric acid. Another shipment of vegetable oil was fixed to Cuba from Kaliningrad, Russia, the third such cargo within a month. Base oils have been quoted to Brazil and West Africa, with talk of a small cargo to the Caribbean.

There is not a great deal of space along the Far East route remaining for January as demand has escalated. Base oils in the amount of 11,800 tons were worked from the United Kingdom to Singapore, and several further possibilities of base oil were noted. Eight thousand tons of hydrocracker bottoms were booked from Lavera, France, to Ulsan, South Korea, on the basis of direct-sailing on a larger vessel. Freight must have been pretty strong on that deal, but the material has to arrive in Korea prior to a jetty closure. Styrene has also been quoted, which is rather odd, given the flow of styrene into Europe from the U.S.

The India and Middle East Gulf traffic in small parcels has rebounded, tightening space a little this week, but there are still ships on berth and rates remain much the same as before. Base oils are being evaluated into India and the Middle East Gulf, along with parcels of isopropanol, cyclohexanone, oxo-alcohols, ethylene dichloride, acid, hexane and acrylonitrile.

Asia

Strangely, given the appetite for imports from the U.S., the local market into China has retracted slightly. There are still plenty of inquiries, of course, especially along the principal Korea-to-China routes. This means that most small tankers are busy, but there are some larger units that are still open in the area in about 10 days time, which have still to fix. This year, the lunar holidays commence in mid-February, and usually, there is a great deal of activity and stockpiling in the weeks beforehand, to be followed by inertia after the holidays. Bad weather delays persist in the area, with some ships known to have been stuck in port for up to six days. There is a fair amount of base oil activity in all the individual trade lanes within Asia. Rates are mostly stable, though the availability of tonnage means that cargoes do not hang about for long.

Benzene arbitrage on the transpacific export route are currently closed for spot deals, with only contractual cargoes moving. Ten thousand tons of paraxylene is potentially looking to ship from Korea to the U.S. Atlantic Coast for mid-February, but there seem to be issues with the sale and the deal is stalling. The January shipment of 20,000 tons of paraxylene went in the low- to mid $50s/t, and 5,000 tons of base oils fixed from Singapore to Houston for January, but it is an internal shift.

Demand to Europe is steady and several ships have gone on berth, but still have last bits of space to fill. Seven thousand tons of base oils from Malacca, Malaysia, to Antwerp are still there to be fixed, while 3,500 tons of base oils from Korea to Le Havre, France, are rumored fixed for around $100/t. Various biodiesel cargoes have been seen, along with caustic, acetone, acids, solvents and paraffins.

The situation in the regional market is much the same. A number of ships along the India and Middle East Gulf are still open this month, but there is a jumble of cargoes all being quoted for prompt loading. Base oils feature heavily, with many cargoes either fixed or looking to move from Al Ruwais, U.A.E., Sitra, Bahrain, Karachi, Pakistan, Mumbai, India, Iran and Yanbu, Saudi Arabia.

Eastbound also sees a rash of base oil inquires from many of the same supply points. Demand remains good and freights are unchanged, with cargoes of methanol, methyl tertiarybutyl ether, styrene, ethylene dichloride, paraxylene and orthoxylene noted.

Westbound remains reasonably active, with a number of requirements that have been quoted for several days remaining uncovered. An inquiry for 3,000-4,000 tons of base oils from Sitra to Antwerp-Rotterdam-Amsterdam was unusual.

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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