SSY Base Oil Shipping Report

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U.S. markets have gone into temporary hibernation. European coastal markets have been rather flat this week as well, while Asia has slowed down in early preparation for the New Year.

U.S. Gulf

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On the face of it, there ought to be some shipments still taking place to Asia. Cargoes of ethanol, methanol and styrene have been quoted, and there is cumene and ethylbenzene too. On paper, paraxylene and glycol are workable, while other products such as acrylonitrile, ethylene dichloride and phenol are also considered workable. However, the lack of February vessel space is a major obstacle, and with the Chinese New Year looming nobody seems to be in much of a hurry to get anything done. Rates are notionally unchanged.

Things are somewhat stationary on the eastbound transatlantic route, and prompt space is beginning to show. Traders still talk about styrene into the Mediterranean and also Antwerp-Rotterdam-Amsterdam, and there are noises about parcels of cyclohexane, methylmethacrylate, biodiesel, diethylene glycol, turpentine and ethanol. A cargo of crude tall oil was fixed from Mobile, Alabama to the Baltic.

It has been a dull week into the Caribbean. Small parcels of ethanol have been seen into Colombia, and some methanol was noted to Rio Haina, Dominican Republic. Caustic and solvents are being discussed to Mexico, and there is a selection of palm oil to ship in this direction, too.

Space on the route into the east coast of South America is being hotly pursued by traders who are keen to send caustic into Brazil to help cover the shortfall caused by the outage of the plant in Maceio, Brazil. In addition, three cargoes, each of around 13,000 tons, of ethylene dichloride, were booked on three different vessels, also going to Maceio and all around low $50s per metric ton. Urea ammonia nitrate and ethanol are the other products being quoted at the moment.

Base oils have again been actively quoted to India this week from both the U.S. Gulf and the U.S. Atlantic Coast. One parcel of 10,000 tons is understood to have filled out the balance space of one ship already on berth in mid-February. Another owner has booked a large cargo of ethanol to Al Jubail, Saudi Arabia.

Europe

For the most part, owners have managed to book their vessels ahead by seven to ten days along the North Sea and Baltic route, although there are always going to be some prompt ships around. Clean petroleum has been reasonably active, and aromatics, caustic and biodiesel had a good showing this week. Base oil shipments are not as widespread as previously, but there are still a number of movements taking place both into and out of the Baltic, plus further shipments have been done within the North Sea.

Demand for vessel space has been quite strong into the Mediterranean along the southbound route, with plenty of possibilities noted, including, biodiesel, ethylene dichloride, caustic, paraxylene, styrene, ethanol, methyl tertiarybutyl ether, vegetable oil, acrylonitrile, pyrolysis gasoline, ethyl acetate and base oils. However, rates have been surprisingly competitive. Six thousand tons of paraxylene from Rotterdam to Iskenderun, Turkey, for example, saw offers in the high $40s and low $50s/t, yet ended up going on a complete outsider in the low- to mid-$40s/t. Six thousand tons of pyrolysis gasoline went from Dunkirk, France to Priolo, Italy, at just 30/t, which is a little lower than usual.

The northbound route has not been quite as busy this week. Pyrolysis gasoline is perhaps the stand-out commodity, with cargoes booked from Lavera, France, Berre, France, Tarragona, Spain, Sines, Portugal, and Augusta, Sicily. At $175,000, the rate on the 2,600 tons of pyrolysis gasoline from Augusta was slightly higher than usual, but the others were more or less in line.

It has been a week that has seen a reasonable amount of spot demand along the inter-Mediterranean route, and prompt space is relatively tight, yet owners have not really been able to advance rates and secure significant increases. Of particular note has been the amount of vegetable oil conducted out of the Black Sea, and also the number of small clean petroleum shipments that have occurred. Neither vegetable oil nor clean petroleum is particularly glamorous, but they are useful in terms of positioning tonnage, and in the case of clean petroleum it is interesting to note that a growing volume is controlled by charterers other than producers.

It has been another fairly exciting week westbound. Further cargoes of paraxylene are being discussed, and at close to the $40/t seen last week. Caustic is also around, though the charterers are balking at paying numbers in the $40s/t again. Several large lots of pyrolysis gasoline have been mentioned, as well as some benzene and toluene. Mixed xylenes is apparently short in the U.S. and could ship from Europe. More MTBE is under discussion, and 10,000 tons of biodiesel was quoted from Liverpool to the U.S. Base oils have been discussed to the U.S. Gulf from Rotterdam and Antwerp, while 5,000 tons of base oil was fixed from Le Havre, France, to Punta Cardon, Venezuela, and there has been talk of base oil from the Mediterranean to Cuba.

It continues to be fairly busy out towards Asia. Space is quite tight for February and one owner made a virtual clean sweep of the base oil cargoes to Singapore. The process oil from Hamburg, Germany, to Korea and China was also believed to have been booked. However, the base oil cargo that had been fixed to ship to Singapore from the Black Sea was diverted to Antwerp-Rotterdam-Amsterdam instead.

There are not so many prompt candidates to India and the Middle East Gulf, several having already sailed, but this still leaves a reasonable selection of ships and rates therefore remain soft. The amount of base oil quoted has diminished this week.

Asia

The urgency with which cargoes were quoted along the domestic Asia route for the past couple of weeks has gone. Instead, charterers have begun to look at shipping later in February and even in March, well after the festivities will have ended. The only prompt requirements quoted are to replace existing fixtures in which ships have run late due to the bad weather and port congestion that affects Northeast Asia. Many ships are fixed past the vulnerable stage of the holidays themselves, but there are still some that need to fill the last tanks. Most of the base oil opportunities this week are for shipment after the holidays.

Some contractual benzene possibilities still exist on the transpacific export route in February, but spot volumes are negligible or tentative. Space is available, but it tends to be selective and unsuitable for all cargoes. Rates are expected to soften. There is quite an active parcels market into Europe, but this means there are ships on berth still with space to fill. Rates for the small parcels are in the usual ranges – $120 and upwards, depending upon ports, while large cargoes see levels from $60/t and upwards. Ten thousand tons of caustic was fixed from China to the Mediterranean in the mid-$70s/t. Base oils are understood to be moving back into the Mediterranean from Asia.

The regional market into India and the Middle East Gulf shows little signs of abating, with robust demand noted for all manner of chemicals, acids and clean petroleum, much of which remains unfixed for several weeks. Base oils continue to be seen. One of the more interesting shipments was 19,000 tons from Al Ruwais, U.A.E., to Mumbai, India, in a single lifting, and further base oils have been noted from Yanbu, Saudi Arabia, Jeddah, Saudi Arabia, Al Ruwais, Sitra, Bahrain, and Mumbai. Eastbound remains firm with decent demand noted. Six thousand tons of base oils from Al Ruwais to two ports in China are believed to have fixed for around $68/t, and 15,000 tons of paraxylene from Sohar, Oman, to mid-China paid mid-$40s/t for shipment later in February. Westbound is unchanged. A number of vessels have part-cargo space but equally a number of cargoes remain unfixed.

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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