SSY Base Oil Shipping Report

Space from the U.S. Gulf is gradually draining away for the rest of the month due to improved demand. November space is tighter within Asia too. European markets are busier than previously, but lack of space is not an issue.

U.S. Gulf

Contractual demand has picked up substantially from the U.S. Gulf into the Far East, with November space becoming tight, and even December space starting to fill up. Rates have jumped yet again, and owners now rate 5,000-ton parcels from Houston to Korea to be in the low $60s per metric ton for fixing. Spot requirements of methanol, ethanol, styrene, mixed xylenes and solvents have been noted for both November and December.

Transatlantic demand remains strong, and rates look firmer. Styrene is being attempted to northwestern Europe, but there have also been multiple quotations of styrene to Turkey, with at least one cargo of 10,000 tons fixed. Traders are also pushing hard for space for paraxylene to Algeciras, Spain, and Sines, Portugal, while 10,000 tons of mixed xylenes was worked, but failed subjects from the U.S. Gulf to Antwerp-Rotterdam-Amsterdam. Ten thousand tons of renewable diesel fixed to Norway, and 6,000 tons of used cooking oil was booked to the United Kingdom, with a further 5,000 tons quoted from Norfolk, Virginia, and Wilmington, North Carolina, to Rotterdam. Two thousand tons of lysine was seen from New Orleans to Amsterdam, and several parcels of the monoethylene glycol were attempted to Antwerp-Rotterdam-Amsterdam from Geismar, Louisiana, and Point Comfort. Six thousand tons of monoethylene glycol and diethylene glycol could be worked to Turkey, preferably in combination with 16,000 tons of caustic into the Mediterranean. Between 3,000 tons and 6,000 tons of pyrolysis gasoline was quoted from Houston to Antwerp-Rotterdam-Amsterdam. More methanol was covered from the U.S. Gulf to the U.K. Continent, with a further 20,000 tons quoted from Point Lisas. Four thousand five hundred tons of vinyl acetate monomer fixed from Houston to Antwerp. Twenty-five thousand barrels of JP8 - jet fuel for military helicopters - was seen from Seabrook, Texas, to the east coast of the U.K. and Cyprus. Five thousand tons of metaxylene was fixed from Texas City to Algeciras for prompt, but the end of November requirement remains unfixed. Some small volumes of base oil have been seen moving to North France from the U.S. Gulf.

A little more enquiry had been noted along the Caribbean route last week, involving chiefly methanol and caustic, along with some vegetable oil parcels. There is still prompt space around, however, and rates remain unchanged.

There has been some interest in sending ethanol southbound into the east coast of South America, but not to the same extent as in recent weeks. Parcels of base oil and aviation gasoline have been shown around to Brazil, and 13,800 tons of clean petroleum was seen from New Orleans to Santos, Brazil, for Nov. 17 through 19. Five thousand tons of caustic was seen from Houston to Santos or Paranagua, Brazil, with a further 6,000 tons of caustic quoted from Maceio, Brazil to Punta Perreira, Uruguay.

Traders still talk of possibilities to do large lots of ethanol out to the Middle East Gulf and India. Base oil is another commodity that is attracting interest from traders looking to send material from the U.S. Gulf and Paulsboro, U.S., to India in November. Five thousand tons of styrene was worked from Braithewaite, Louisiana, to the west coast of India for the end of November, while a further 5,000 tons of styrene was seen from St. James, Trinidad and Tobago, to Hazira, India.

Europe

The North Sea and Baltic market looks to be a little busier, with most ships now fixed past mid-month. Biodiesel has been at the core of much of the new activity, along with pyrolysis gasoline, ethanol and caustic, with a number of very prompt requirements such as ethylene dichloride and methanol as ships ran late and needed to be replaced. Clean petroleum is not that active, but cargoes that are not a perfect fit in terms of size or dates to the tonnage that is available can take a while to cover. Fewer base oil possibilities had been noted last week.

More business has been recorded southbound into the Mediterranean over the past week. Turkey looks to be getting back on track with several ships fixed with acid and ethyl acetate from the U.K. and Antwerp-Rotterdam-Amsterdam, while acrylonitrile has re-appeared from Ventspils, Latvia, after a long interlude. Five thousand tons of benzene was noted from Antwerp-Rotterdam-Amsterdam to Huelva, Spain, and 5,500 tons of pyrolysis gasoline fixed from Dunkirk, France, to Priolo, Italy, at around 170,000. FAME and ethanol cargoes were seen into the French Mediterranean, while 7,000 tons of FAME from Rotterdam to Taranto, Italy, yielded around 250,000. Four thousand five hundred tons of methyl tertiary butyl ether was noted from Antwerp-Rotterdam-Amsterdam to Greece, and 5,000 tons to 6,000 tons of methanol was attempted from Rotterdam to Haifa. Four thousand tons of caustic went from Rotterdam to Lavera, France, while a plant issue at Leixoes, Portugal, has meant several aromatics and solvent contractual commitments being serviced by other producers. Traders continue to look at sending base oils to Greece, and there has been some interest in shipping base oils to Turkey again from Continental Europe and the Baltic.

Northboundrates are steady amid stable demand. Three thousand five hundred tons of bio-naphtha from Venice to Antwerp-Rotterdam-Amsterdam fetched $65/t. Five thousand tons of base oils were booked from Augusta to Antwerp-Rotterdam-Amsterdam for onwards transhipment to Durban, South Africa, and 5,000 tons of alkylate was covered from Augusta too, leaving 2,600 tons of pyrolysis gasoline still to be fixed from Augusta. Between 5,000 tons and 6,000 tons of pyrolysis gasoline is looking for space from Berre, France, while a couple of caustic cargoes were booked from Lavera to U.K. continent.

A few more prompt requirements were introduced into the market last week along the intra-Mediterranean route, which allowed almost all the idle vessels to push forward, although in several cases the voyages are not long and the ships will be open again just after mid-month. Biodiesel has again been the saviour for many owners. Base oil interest has picked up, with reasonably large cargoes seen to Egypt, Turkey and Israel.

More questions have been asked about benzene westbound on the transatlantic route, but nobody yet seems to have fixed any. Cargoes of FAME were noted from Hamburg and Le Havre, France, and 15,000 tons of ammonium polyphosphate fixed from Sillamae, Estonia, to Wilmington. More sulphuric acid was noted from the Baltic to the U.S., but for January. Five thousand tons of paraxylene from Rotterdam to the U.S. Atlantic Coast was booked at around $37/t, down from the previous lifting. Space is a bit tighter now, however, and it might be harder to replicate that level. Two thousand five hundred tons of nitrobenzene fixed from Aveiro, Portugal, to Savannah, and 2,200 tons of wax concluded from Fawley, U.K., to the U.S. Gulf. Twenty-two thousand tons of phosphoric acid was done from Safi, Morocco, to the west coast of South America, and 4,000 tons of Methylene diphenyl isocyanate was seen from Rotterdam to Geismar.

Traders have again been asking questions about styrene, and 6,000 tons was indeed booked from Tarragona, Spain. Fixtures include hydrocracker bottoms, butnediol, adiponitrile and several parcels of base oil. Enquiries have been noted for mixed xylenes, acrylonitrile, methanol, phenol, urea ammonia nitrate and molasses as well as 18,000 tons of base oils from Fawley, U.K., and Augusta, Sicily, to Singapore.

Cargo volumes are steady with base oils, solvents, acrylonitrile, acid and vegetable oils noted. Rates on vegetable oil are reported to have increased out of the Black Sea.

Asia

November space looks tighter in domestic Asia, with a gradual build-up of contractual demand as well as steady spot demand. Freights have increased, on several trade lanes but some owners seem content to apply moderate increases only. Aromatics into China are seen as the cause of tightness in Northeast Asia, and there has been a steady build-up of demand for these products on the northbound routes too. The number of vessels that are open only in December continues to increase. More parcel cargo activity has been reported, but it is insufficient to raise rates. On the southbound route, several caustic shipments have been noted, along with sulphuric acid and light cycle oil. Between 10,000 tons and 15,000 tons of biodiesel looks to have fixed from Taiwan to Southeast Asia. More methanol was seen moving from Taicang, China, to Southeast Asia, and 1,500 tons of solvent naphtha C9 was seen from Korea to Port Klang. Three thousand tons of base oils were attempted from Korea to Manila, Philippines. In Southeast Asia, the slowdown in palm oil traffic to India may nudge a few more ships towards the chemicals trade. Clean petroleum is described as sluggish too. Regular cargoes of pyrolysis gasoline, paraxylene, methanol, base oil and benzene have been noted, as well as further large ethanol movements from Straits to Southeast Asia and South China.

The benzene arbitrage is still not clearly open on the transpacific service, yet space is not that readily available for December export, with good demand seemingly in place for small parcels of isopropanol, acetone and hexane, as well as many sulphuric acid liftings. Owners are asking for rates in the $60s/t for 5,000-ton parcels from Korea to the U.S. Gulf, but will settle in the mid $50s/t. Again it is the biodiesel market and its feedstocks that seem to be driving the market to Europe, with plenty of quotations and a few fixtures seen. In addition, there are cargoes such as cyclohexane from Map Ta Phut, Thailand, which remain uncovered for weeks because owners will not entertain rates in the $60s/t. Traders are looking at sending base oils to Israel from Korea, and there are additional requirements of acid, acetates and solvents to Turkey, as well as benzene from Map Ta Phut to either Antwerp-Rotterdam-Amsterdam or the U.S. Gulf for the end of December.

Cargo demand is building again in regional markets along the India and Middle East Gulf route, after the holidays have finished and space looks to be on the tight side. Good base oil demand exists from Al Ruwais, U.A.E., and Yanbu, Saudi Arabia, towards India and the U.A.E., with a couple of cargoes booked. Eastbound demand has also picked up, especially with paraxylene, pyrolysis gasoline and benzene from the west and the east coasts of India. Several large lots of MTBE, methanol, caustic and styrene were seen from the Middle East Gulf to the Far East, as well as the many smaller parcels from the Middle East Gulf, and several ethanol quotations from Karachi, Pakistan. Westbound sees benzene being fixed to Europe and the U.S. Gulf from India, with some pyrolysis gasoline quoted to the U.S. Gulf, and more caustic being attempted to the Mediterranean. An enquiry to ship 9,000 tons of base oils from Yanbu to Syria will prove to be very difficult.

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.