SSY Base Oil Shipping Report

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Demand for vessel space in the primary hubs of the United States Gulf, Europe and Asia can be described as steady, but falls short of the levels of business that are usually associated with the end of February.

U.S. Gulf

The last bits of February space along the Far East route are on subjects, and there are a couple of positions still within March, but space is not that plentiful. A large slug of paraxylene is believed to have fixed from U.S. Gulf to Far East on one of the outsiders around on prompt dates. Twenty thousand tons of methanol was booked from Jose, Venezuela, to the Far East on another outsider. Styrene is being investigated, and it is possible there will be more paraxylene to be shipped. Five thousand tons of phenol was seen from Mobile, Alabama, to Asia, and 14,000 tons of vegetable oil was quoted from New Orleans, Louisiana, to Korea for the first half of April.

There is not a great deal of diversity in the requirements being seen this week on transatlantic routes. A number of caustic parcels are vying for attention into the Mediterranean, but not all are expected to firm up. As expected, 8,000 tons of cumene was booked from the U.S. Gulf to Antwerp-Rotterdam-Amsterdam, with rates in the mid $40s per metric ton. Traders continue to evaluate small lots of orthoxylene from the Middle East Gulf to Antwerp-Rotterdam-Amsterdam for the first half of March. Small parcels of diethylene glycol have again been mentioned to Turkey, and 10,000 tons ethylene dichloride was quoted from the U.S. Gulf to Barcelona. Prompt requirements include 8,000 tons of ethanol from St. Rose, Louisiana, to Rotterdam and 4,800 tons of linear alkyl benzene from Becancour, Quebec, to Algeciras, Spain.

There is not a great deal of space around on routes to the Caribbean for the rest of the month. With delays caused by fog in the Houston Ship Channel starting to build, the next round of scheduled space will only occur from the mid-March to the second half of the month. It may be possible that a large cargo could entice an outsider on berth, but with most routes out of the U.S. Gulf looking tight on March space, owners with uncommitted tonnage will likely be selective as to which cargoes they offer on. It has been a week of caustic inquiries, with cargoes quoted to Puerto Cortes, Honduras; Coatzacoalcos, Mexico; Port Kaiser, Jamaica; Port Alfred, South Africa and finally to St. John, New Brunswick. In addition, there has been a tender for 6,300 tons of ethanol into Kingston, Jamaica, for the first half of March. One thousand tons of base oils were quoted from Houston to Rio Haina, Dominican Republic.

It appears that a couple of prompt ships sailed with space this week to the east coast of South America. There are also some upcoming March vessels that are advertising space. On the other hand, spot demand has been reasonable, with 9,500 tons of base oils quoted from Houston to Brazil. Meanwhile, others have 6,050 tons of base oils heading from the U.S. Gulf to Rio de Janeiro for the same loading window. Traders continue to talk of styrene to Santos, Brazil, and 13,000 tons of ethylene dichloride from the U.S. Gulf to Maceio, Brazil, is again being attempted. A large cargo of caustic was quoted to Brazil. Several ethanol fixtures are known to have occurred on routes to Brazil, with several more ethanol requirements doing the rounds. In addition, 1,100 tons of glycols were quoted to Campana, Argentina.

Space is limited on routes to India in March on the scheduled carriers. With several large base cargoes such as ethanol, paraxylene, ethylene dichloride and base oil around, it is possible that additional tonnage will be brought on berth. Small parcels of butanol, hexane, glycol ether and acrylonitrile are quoted, and there is still interest in moving styrene to India.

Europe

A slight improvement in demand has nudged many ships forward onto the North Sea and Baltic route into March. Biodiesel has been especially active, but there has been a greater number of requirements such as ethanol, reformate, alkylate, pyrolysis gasoline, MTBE and C7, which point towards better demand coming out from the gasoline pool. In the Baltic, new ice is being encountered in the areas around Naantali, Finland, and along parts of the Swedish coast, but tougher ice-class restrictions have not been imposed on calling Kotka, Finland, and Hamina, Finland. A string of vessels have been fixed to load base oils from the Baltic to the United Kingdom and Antwerp-Rotterdam-Amsterdam, alongside a large movement to West Africa.

Some scheduled owners are reporting a lack of space on southbound routes for the next three weeks on the routes into the Mediterranean, and indeed, a number of prompt relet cargo possibilities have been noticed as a result. Space should still be available on many of the frequent outsiders however. Cargoes of paraxylene, caustic, ethanol, styrene, FAME, orthoxylene, base oil, acetates, acetic acid, MTBE, methanol, paraffins and acrylonitrile are among the many requirements worked this week.

There is still some interest in pyrolysis gasoline and heavy aromatics on northbound routes this week, but not to the same extent as last week. Mixed xylenes and reformate cargoes have been shown out of Italy, and there was some caustic to Northern Spain, as well as a large lot of wax that was booked from Greece and Italy. The toluene unit in Leixoes, Portugal, that had been unexpectedly shut down is evidently back in operation, with some large volumes of toluene and xylene quoted up to Antwerp-Rotterdam-Amsterdam.

There are suggestions that the amount of prompt space has thinned on routes within the Mediterranean, at least for some destinations and some cargoes that require certain approvals. All the same, there still seems to be a raft of tonnage open in around seven to 10 days time, which will peg back freight levels. The volume of FAME being shipped has been impressive. Benzene continues to fix out of the Black Sea and East Mediterranean, along with acetic acid, caustic, methanol, oxo-alcohols, urea ammonia nitrate, hexane and vinyl acetate monomer. A parcel of cumene from Temryuk, Russia, to Porto Marghera, Italy, which has been quoted for several weeks, already seems to be uncovered so far. Apart from routine deliveries, the base oil scene in the Mediterranean seems quiet.

Pyrolysis gasoline continues to be one of the primary products discussed on transatlantic routes, with cargoes noted from Antwerp-Rotterdam-Amsterdam and the Baltic, several of which have been on the larger side. Five thousand to 7,000 tons of paraxylene was quoted from Rotterdam to Charleston, South Carolina, and 10,000 tons of FAME was noted from Hamburg to the U.S. Atlantic Coast. Also, 2,000 tons of paraffin wax was noted out of Hamburg. Twenty thousand tons of sulfuric acid was booked from Ronnskar, Sweden, to the U.S. Atlantic Coast for around $50 per metric ton, and 33,000 tons of urea ammonia nitrate from the Black Sea to the U.S. Gulf fetched mid $30s/t.

Space is generally snug on the March ships heading out to Asia. Styrene has been frequently quoted, but the lack of space and therefore strong freight levels quoted by owners means little has actually been booked. A large slug of urea ammonia nitrate may have lifted subjects from Baltic to Australia, and a cargo of molasses was being worked from Damietta, Egypt, to Surabaya, Indonesia, in the low- to mid-$50s/t. An interesting cargo of aromatics appears to have fixed from Black Sea to China. There have been a number of inquiries for acetone and oxo-alcohols, in addition to the usual small parcels of fancy grades to Japan, Korea, Taiwan and China.

Styrene has featured on the route to India and the Middle East Gulf, along with some slugs of base oil from the Mediterranean and northwestern Europe to India and the Middle East Gulf. The usual parcels of hexane, butanol and acrylonitrile are believed fixed from the East Mediterranean, and further parcels of solvents, oxo-alcohols and acid have been seen.

Asia

Owners have generally been able to fix on Domestic Asia routes through the first week or two of March, with the bulk of the fleet centered on mid-March dates. Only a few fortunate vessels are showing April space at this stage. Fog is still a problem in China, and congestion at Ulsan, South Korea, is also quite lengthy. Spot demand is strangely flat on some of the routes between Korea and China, and there is not a great deal happening into Southeast Asia either. Small parcels of base oils have been seen, but none have been truly exceptional. Northbound space may be tight until mid-March, but owners seem unwilling to contest charterers freight ideas. Cargoes of paraxylene, mixed xylenes, pyrolysis gasoline, heavy aromatics and benzene concentrate seem to form the majority of spot requirements, along with the occasional parcel of base oil, toluene, styrene and benzene. An enquiry for 10,000 tons of palm methyl ester from the Malacca Straits to China might herald a return of biodiesel imports into China, which temporarily boosted the route last year.

Benzene has been booked on the transpacific route, with 9,000 tons heading to the U.S. Gulf from Korea in the low $50s/t. Other traders have been looking at sending benzene, pyrolysis gasoline and mixed xylenes to the U.S. too. Some of the toluene and paraxylene possibilities are believed to be uncovered too. Owners are seeking rates of $60/t for 5,000-ton parcels from Korea to the U.S. Gulf. Sulfuric acid continues to fix to Chile. There is a lot of interest in shipping biodiesel and used cooking oil back to Europe, with several outstanding requirements from earlier in the month still unfixed. Some of the smaller vessels have managed to fix away, but there are still a couple left for March. Twenty thousand to 25,000 tons of sulfuric acid was quoted from China to Morocco, and 10,000 tons of acetic acid was booked from China to Antwerp-Rotterdam-Amsterdam. Two thousand tons of cyclohexanone was noted from Kaohsiung, Taiwan, to Castellon, Spain, and the same small lot of orthoxylene from last week is quoted out of Korea. Small parcels of 2-ethylhexanol and acrylate have also been talked into Turkey.

Along the route to India and the Middle East Gulf, there is a reasonable volume of demand on the regional markets this week, though perhaps slightly down from recent weeks. Eastbound sees a couple of familiar methanol, benzene, paraxylene and glycol requirements that seem difficult to cover. Fifteen thousand tons of caustic are said to have fixed to Futong, China. Other inquiries include ethanol, styrene and MTBE. An interesting quotation was for 6,000 to 9,000 tons of benzene from Shuaiba, Kuwait, to China. Westbound space remains tight and seems to be an obstacle for fixing. The usual parcels of glycol and paraxylene have been seen, along with some benzene from India; Yanbu, Saudi Arabia; and Shuaiba. An unusual quotation is for 5,000 tons of base oils from Jeddah, Saudi Arabia, to Derince, Turkey.

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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