SSY Base Oil Shipping Report

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Markets around the world still feel eerily calm, almost as though they are waiting for something like a spark to ignite demand, but it just fails to happen. For many owners it is a hand-to-mouth existence.

U.S. Gulf

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With space in short supply, it is becoming difficult to fix anything into the Far East. Traders are sniffing around opportunities to send styrene and ethylbenzene out to Asia. More methanol has been discussed, as has ethanol, with confirmation received that the 20,000 cubic meters of ethanol enquiry out of Clatskanie, Oregon, to Ulsan grew to nearly 30,000 cbm in size and was covered. Twenty-two thousand five hundred tons of tallow and technical corn oil was quoted from U.S. Gulf to Singapore, and attempts are still being made to ship a small lot of canola oil from New Orleans to Nantong, China.

Contractual nominations along the transatlantic route are proving to be rather heavy for March, with several of the scheduled carriers reportedly having little or no space left. Traders continue to look at 3,000 tons to 5,000 tons lots of styrene to both Antwerp-Rotterdam-Amsterdam and Turkey for March through April. Eight thousand tons of easy cumene from Houston to Antwerp-Rotterdam-Amsterdam ended up paying mid $40s per metric ton. Several traders are studying ways to ship glycols across, with enquiries to Antwerp, Barcelona, Genoa, Italy, and Gebze, Turkey.

There is some uncertainty into the Caribbean if all the caustic requirements have been booked, but certainly the enquiry for 20,000 tons to 25,000 tons caustic from Houston or Corpus Christi, Texas, to Port Kaiser, Jamaica, is still there. Similarly, the enquiry for 6,300 tons of ethanol into Kingston, Jamaica, for the first half of March is still around, and could be combined with 10,000cbm ethanol Texas City to Cartagena, Colombia. Twelve thousand tons of caustic was quoted from Lake Charles, Louisiana, to Matanzas, Venezuela. A bunch of molasses, vinasses and vegetable oil cargoes have been spotted too.

Space looks to be a bit tighter this week for the first half of March loading into the east coast of South America. The enquiry to ship 6,050 tons of base oils to Brazil was unable to find sufficient space and only part of the requirement was covered, leaving behind 3,800 tons still to be moved from Pascagoula, Mississippi. Thirteen thousand tons of ethylene dichloride was booked from Mississippi to Maceio, Brazil, along with 10,000 tons of paraxylene from Corpus Christi to Suape, Brazil. A further shipment of 10,000 tons paraxylene is looking for space to Suape for end March.

U.S. Gulf to India:Along the route into India, a large slug of xylene was booked from U.S. Gulf to the west coast of India, seemingly along with some hexane in the high $60s/t. Base oils are active with a bunch of requirements being seen to India, some of which were reportedly booked, with rates for these larger cargoes ending up in the mid $60s to low $70s/t. Fifteen thousand tons of ethylene dichloride from the U.S. Gulf to the west coast of India also achieved mid $60s/t. Five thousand tons and 10,000 tons of styrene parcels continue to be evaluated into Mumbai.

Europe

The North Sea and Baltic region has not made much new progress this week. Ships are managing to avoid becoming stuck in spot to prompt open positions, but rates are stagnating again. Biofuels have been the clear winner in terms of generating the greatest amount of spot demand. The end of February saw a couple more base oil parcels fixed out of the Baltic, but hardly any fresh new enquiries have been seen for March.

It has been another active week southbound into the Mediterranean, with some owners complaining of being overbooked for March, while other owners have benefitted from taking their relet cargoes. FAME has been busy, with cargoes being fixed from the Baltic and North Sea to various ports in Spain, France, Italy and the Black Sea. There have been several base oil cargoes fixed, of which almost all have been for term customers. Some, however, were sent to meet an exporting vessel in a ship-to-ship transfer, a method of moving product deep-sea that has met with a great deal of success in the base oil community. A parcel of ethanol was booked into France, and cargoes of methanol, aromatics, caustic and aviation gasoline have also been done into the Mediterranean. Five thousand tons of acrylonitrile loaded from Ventspils, Latvia, to Yalova, Turkey, and already the next requirement is being circulated.

It was a busier week on the northbound route, although rates appear to be unchanged. Six thousand five hundred tons of aromatics from two ports in Italy to Antwerp-Rotterdam-Amsterdam went for mid 40s/t, and 5,000 tons of benzene from Sarroch, Italy, to Antwerp-Rotterdam-Amsterdam reportedly achieved $45/t. A couple of 10,000 tons slugs of methanol were worked from Marsa El Brega, Lybia, to Rotterdam. Six thousand tons of pyrolysis gasoline from Berre, France, to Antwerp-Rotterdam-Amsterdam went in the mid 20s/t. In terms of base oil, 3,800 tons was quoted from Valencia, Spain, to Rotterdam, the first time that the new terminal has been used for an export cargo, and 8,000 tons of base oils were booked from Kavkaz, Russia, to Rotterdam.

Bad weather in along the intra-Mediterranean route inflicted damage to several installations in Sicily, including some in Augusta, Sicily, which has resulted in berthing delays for around 20 to 25 vessels. With ships out of position, a series of relet cargoes have been quoted. Benzene has been active into Venice, with cargoes noted from Chornomorsk, Ukraine, Constanza, Romania, Aliaga, Turkey, Haifa, Israel, and Skikda, Algeria. A paraxylene cargo was booked from Kulevi, Georgia, to Iskenderun, Turkey, and more paraxylene had been attempted to Algeciras, Spain, and/or Sines, Portugal, from Kulevi, Georgia. FAME has enjoyed a busy week too.

Westbound has generated a little more demand, and looking ahead, space along the transatlantic route seems a little tighter. In the meantime, however, a couple of nervous owners took cargoes at rates that were a lot lower than expected. Seven thousand tons of paraxylene from Rotterdam to the U.S. Atlantic Coast went in the mid- to high $20s/t, for example, undercutting the rest of the competition by some $10-12/t. A number of pyrolysis gasoline opportunities were noted. FAME was busy, with 20,000 tons fixed from Ghent, Belgium, and a further 10,000 tons was done from Hamburg, and with further demand noted from Spain. A couple of caustic cargoes were booked. A large lot of base oils went from the Mediterranean to the Caribbean, with a new, smaller requirement noted. Several methanol cargoes were observed from Rotterdam to the U.S. Gulf, seemingly the result of the U.S. sanctions against Venezuela that are preventing methanol imports from that country. Eighteen thousand tons of sulphuric acid was booked from Hamburg at $24-25/t, with the next lot quoted for the first half of April. Fifteen thousand tons of ammonium polyphosphate fixed from Sillamae, Estonia, to the U.S. Gulf.

With scheduled space tight for March, a couple of outsiders have gone on berth into the Far East. Styrene and base oils have been booked, and there has been a string of enquiries for small, speciality grades in the 800 tons to 2,000 tons size bracket.

Along the India and Middle East Gulf route, styrene continues to be seen into India. Base oils have also been busy, with fixtures into India, the United Arab Emirates, Jordan and East Africa. Another large shipment of mixed xylenes is understood to have been booked to Sikka, India, and there have been a bunch of small parcels of solvents quoted into the Red Sea, United Arab Emirates and India. Between 6,000 tons and 7,000 tons of methanol has been attempted from Arzew, Algeria, to the west coast of India.

Asia

The feeling along the domestic route is that the local market is not performing as well as it should post-Lunar holidays. Demand is much lower in general from China, and this can be felt throughout the region, but especially within Northeast Asia where ships are rarely fixed much more than two weeks ahead. Southbound has given owners a few headaches too. Perhaps busiest in terms of chemicals is the northbound route, where there are still numerous cargoes of aromatics, whereas for base oils it would have to be the routes into China, whether from Korea or Southeast Asia, that are busiest. Seventeen thousand tons of base oils were quoted from Singapore to China for the end of March. Somewhat surprisingly, intra-Southeast Asia is active, and freights have increased slightly in the region, perhaps because northbound business is drawing away vessels from the area. Typical 100kb cargoes of clean petroleum from Singapore to Yangon, Myanmar, are now paying $240,000, for example, and 4,000 tons of base oil from Thailand to Singapore fixed in the $30s/t.

March space is virtually all gone on the transpacific export route. Three thousand five hundred tons of pyrolysis gasoline from Onsan, South Korea, to the U.S. Gulf fixed in the $90s/t, which is a very strong number, and 1,000 tons of butanol from Singapore to Santos, Brazil, secured a rate in the $130s/t. Sulphuric acid continues to get fixed in the $70s/t to Chile. The market to Europe is filling up quickly, with little space remaining on the outsiders. Rates have been recorded in the $130s/t to Turkey, but equally $115/t was heard for 2,000 tons of 2-ethylhexanol from Korea to Turkey. Nine thousand tons of cyclohexane from Southeast Asia to the Mediterranean and Antwerp-Rotterdam-Amsterdam is rumoured to have gone in the $80s/t, which is considerably higher than usual. Six thousand tons of base oils were quoted from Malacca, Malaysia, to Antwerp, and there have been numerous cargoes of biofuels, the rates for which have also been creeping up.

Demand is consistent in the regional markets along the India and Middle East Gulf route, with enough prompt business to employ all the open tonnage. Base oils have been moving steadily out of the Red Sea, Bahrain and Abu Dhabi into India, but Iranian base oil seldom features these days. Eastbound sees rather more open space than usual, whereas westbound space is tight. Cargoes of benzene, glycol, caustic, methanol and ethanol have been quoted to Europe.

This report was originally featured in the March 6 edition of Lube Report Americas.

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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