SSY Base Oil Shipping Report

The United States is busy in nearly every area. Europe is more active on the long-haul routes, but coastal routes are somewhat flat. Many Asian routes have a healthy level of activity, but there are some that are starting to stall.

U.S. Gulf

A shortage of available space is the main reason why there have not been more fixtures done along the route into the Far East this week. It is certainly not because of a lack of demand, although the pace should ease around the time of the Chinese New Year. Ten thousand tons of ethylene dichloride was fixed from the U.S. Gulf to Tianjin, China, at $86 per ton for February. Further cargoes of ethylene dichloride are being quoted, and there are big slugs of ethanol to China on the lookout for simple chemical tankers. Phenol, acrylonitrile and paraxylene are out there too, and some traders are looking to develop styrene shipments, but with the uncertainty over anti-dumping duty in China, few are willing to risk going firm.

Styrene is one of the more frequent cargoes to Europe, with fresh inquiries for 5,000-ton to 10,000-ton quantities seen to both Antwerp-Rotterdam-Amsterdam and the Mediterranean. Cyclohexane and diethylene glycol have seen some interest to Antwerp-Rotterdam-Amsterdam, and 20,000 tons methanol was booked across from Trinidad. Other fixtures include biodiesel and urea ammonia nitrate to northwestern Europe, and vinyl acetate monomer and vegetable oil into the Mediterranean. Space is not such an issue along the transatlantic route, and freight levels look static.

Space along the Caribbean route is relatively easy to locate for simple bulk commodities such as caustic, ethanol and clean petroleum, but parcels space can be trickier, depending upon timing and destination. Fifteen-thousand cubic meters of ethanol from Texas City, Texas, to Kingston, Jamaica, and Cartagena, Columbia, cost low $20s/t apparently, while 3,500 tons of caustic from Point Comfort, Texas to Trinidad went in the mid $40s/t, just as a guide.

It has been a busy week for caustic into Brazil, with parcels noted to Aratu, Munguba, Santos, Fray Bentos and Punta Perreiro. There is also a tender for three shipments of ethylene dichloride into Maceio, Brazil, each measuring 13,000 tons. Ethanol is still pretty frequent, and traders are still thinking of doing 10,000 tons of paraxylene to Suape, Brazil, later in February. Eleven-thousand tons of base oils and chemicals were booked as a combination cargo from the Texas Gulf into Brazil and Argentina, seemingly for well over $100/t.

There is a base oil bonanza taking place to India. Some of the larger lots of base oil that were attempted last week failed to complete for early February, but traders are persevering for loading later in February. Rates discussed have been up into the $80s/t for 5,000-ton parcels, but more usual figures should be mid- to high $70s/t. Cargoes of ethanol, ethylene dichloride, phenol and acrylonitrile are also under discussion presently.

Europe

Severe gales throughout the North Sea region brought havoc to the fleet schedules of most owners. It is rare to see pilots simultaneously suspended at both Rotterdam and Antwerp, and the backlog took several days to clear. As a result, there was a spate of prompt shipping inquiries as charterers looked to see what replacement tonnage could be found. Owners seem to have plenty of prompt space around, and poor cargo demand towards the end of January is only going to cause rates to weaken. Base oil shipments have been average, but a lot of the cargo out of the Baltic is destined for deep-sea destinations these days.

The list of cargo quotations along the southbound route into the Mediterranean is again fairly impressive. Charterers are not having any difficulty covering them all, demonstrating that there are plenty of vessels around. Even some potentially awkward liftings such as biodiesel from Klaipeda, Lithuania, and Aarhus, Denmark, to the Mediterranean, or 5,000 tons acrylonitrile from Ventspils, Latvia, to Turkey have all been covered.

As with the southbound route, there have been numerous cargo possibilities on the northbound route, but all have been smoothly fixed without undue effort. Notable shipments include a variety of caustic movements from Lavera, France, aromatics from Italy, biodiesel from Varna, Bulgaria, and the West Mediterranean, and a string of multigrade chemicals parcels from Spain that would normally go on contractual tonnage but have ended up being fixed on the spot due to the narrow loading windows needed which precluded the usual contractual carriers.

Prompt space is steadily building in the West Mediterranean and owners are content to fix at established levels through fear of losing business to competitors. Some of the regular volumes of biodiesel seem to have disappeared this week. A few base oil cargoes have been booked but nothing exceptional.

Transatlantic cargo demand has improved yet again, and space for end January is tighter. Base oils are finally being quoted, with 5,000 tons noted from Rotterdam to Houston. Several base oil shipments have been booked to Nigeria from the Baltic and Mediterranean, and there is mention of base oils looking to ship to Cuba. Assorted cargoes of paraxylene, toluene, benzene, pyrolysis gasoline, mixed xylenes, sulphuric acid, caustic, acetone, perchlorethone and methyl tertiarybutyl ether have been studied and/or fixed this week. Rates are largely unchanged however.

Demand along the Far East route is fairly strong these days, and the amount of outstanding space for February has shrunk considerably. Base oils are being tested to various destinations in Asia from the Baltic, Continent and Mediterranean. Base oils in the amount of 11,700 tons from three ports in the United Kingdom- to Singapore were covered in the high $70s/t, after being worked earlier last week in the low $70s/t. Traders have been looking at cargoes of mixed xylenes, paraxylene, styrene, pyrolysis gasoline, biodiesel, phenol, oxo-alcohols, octene, adiponitrile and acrylonitrile. In addition, there is mention of some large hydrocracker bottoms possibilities to Korea.

There is a scattering of small parcels being quoted to India, but there are a number of ships already on berth and looking for completion cargoes, which will mean most of these cargoes should be fixed painlessly and at competitive numbers. Base oils continue to be fixed to the United Arab Emirates and India.

Asia

The amount of spare January space along the domestic route has diminished considerably, particularly on the busy routes between Korea and China, but also southbound from Korea to Southeast Asia. Tell-tale signs of charterers widening the loading dates to ensure maximum appeal to owners is an indication that they are not finding as much space as hoped for. Demand is also pretty strong on most routes, though some inquiries are now looking more at the second half of February loading. A few requirements stipulate that the cargo should not arrive during the New Year period, yet there are still plenty that are to be shipped throughout the lunar holidays. Base oils are moving both northbound and southbound, and mostly at unchanged levels.

Rates have softened slightly on the transpacific export routes since the arbitrage for benzene and paraxylene is more or less closed and several ships still have space. There are more ships than usual in February on the route to Europe, most of which still have space. Owners remain bullish in terms of their rate ideas but as the loading dates approach they may have to sharpen their ideas.

It is still pretty busy in the regional trades along the route into India and the Middle East Gulf, with some cargoes quoted over and over again, often because owners and charterers cannot compromise on freight ideas. Part of the problem is the amount of time being lost in some ports through congestion and berthing delays which then distorts the true demand to supply picture. Right now, lengthy delays are being seen in Kandla, India, and, because so many inbound ships call at Kandla, it is probable that a ship which has Kandla in its itinerary will be late for its subsequent employment. Base oils are still pretty active from the usual locations.

Eastbound from India and the Middle East Gulf is busy, with a great many cargoes quoted, ranging from the massive 30,000 tons slugs all the way down to small 1,000 ton parcels. Owners are sticking to their firm freight ideas. Westbound continues to see parcels activity, with some hefty levels noted, such as 3,500 tons of heavy aromatics from Mundra, India, to the east coast of the U.K. which paid $125/t.

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.