SSY Base Oil Shipping Report

A big question mark hangs over the U.S. markets and the potential impact on shipping following the breakdown of trade talks with China. European and Asian markets are essentially unchanged.

U.S. Gulf

The market received a scare late in the week when the Houston Ship Channel was closed following a collision between a gas carrier and some barges under tow. Fortunately, the response was rapid and the waterway was opened again, with only some localized restrictions in the vicinity of the accident to allow for the salvage operation. The Caribbean market still looks sedate, and several coated tankers are around off prompt dates. Three thousand tons of base oils are known to be loading from Houston to Cartagena, Columbia, and 1,000 tons of diethylene glycolconcluded from Houston to Altamira, Mexico, on a mid-May position.

The main item of news along the route into South America this week was the sudden stoppage of the Brazilian chlor-alkali plant in Maceio, which has spawned a raft of different enquiries from traders looking to supply caustic and ethylene dichloride into Brazil. There have also been a number of ethanol enquiries into North Brazil for June loading. Most of these are in the 20,000 cubic meter to 30,000 cbm size range, but few have been covered so far because there are no obvious candidates on berth yet. Once contractual nominations have all be conveyed, some completion space may pop up. There has also been some interest in shipping 8,000 cbm to 15,000 cbm of ethanol to Peru from the U.S. Gulf in June. A 35,000 tons enquiry of urea ammonia nitrate was under discussion to Brazil and Argentina from the U.S. Gulf for the first half of June.

There is an eclectic mix of demand for space on the transatlantic route this week. Fewer styrene possibilities were quoted to Antwerp-Rotterdam-Amsterdam, although a new styrene COA was seen for commencement on June 1. Some tall oil was sent to the Baltic from Mobile, Alabama, and there is talk that cumene may have been booked into the Mediterranean, with a further 8,000 tons fixed to Antwerp. A couple of used cooking oil shipments were booked from the U.S. Atlantic Coast, with levels said to be very high $60s per metric ton and low $70s/t. Cargoes of glycol, ethylene dichloride and caustic have been circulated for Mediterranean discharge, with a caustic potash possibility to Tarragona, Spain, tacked onto one of these requirements. Three thousand tons of glycols were quoted from Houston to Klaipeda, Lithuania, for the second half of May. Thirteen thousand tons of caustic concluded New Orleans to Finland. Reports that 5,000 tons of ethylbenzene fixed from St. James to Antwerp-Rotterdam-Amsterdam at $57/t could not be verified.

The situation with regards space into Asia has been put into jeopardy to some extent by the collapse in trade talks between the U.S. and China over tariffs. It may all be part of the negotiation to obtain better terms, and talks might still resume, but unless they do, owners are wary of committing larger vessels to the route, fearful that there will be insufficient cargo to fill the ships. Some strong levels have therefore been seen, with 18,000 tons of vegetable oil from New Orleans to Korea believed fixed in the $70s/t, and a further cargo of 10,000 tons of vegetable oil from Norfolk, Virginia, to Korea is rumored to have achieved $80/t. Between 12,000 tons and 14,000 tons of tallow from New Orleans and Houston to Singapore went in the mid- to high $60s/t for end May.

Several ships can look at small completion cargoes for the second half of May along the India and Middle East Gulf route. Thirty thousand tons of ethanol was heard to have fixed from New York to Jebel Ali at $1.35 million.

Europe

Even though there is a moderate amount of demand in the North Sea and Baltic region and not a great deal of idle tonnage, rates show no real sign of upwards movement, suggesting that there needs to be a sizeable shift in the number of spot cargoes quoted before owners feel confident about challenging established levels. Spot demand includes quite a few relet possibilities as ships run late on performing contractual business. Base oils have slowed out of the Baltic this week.

It is apparent that there are reasonable levels of demand from all regions on the southbound route. Surprisingly, despite the weak Turkish lira a number of spot enquiries are being seen into Turkey. Aromatics have been noted into Portugal, Spain and Italy. Biofuel enquiries have been plentiful into all parts of the Mediterranean and Black Sea. Ethylene dichloride and caustic are being shipped into Spain, vegetable oils into North Africa, reformate into France, base oils into Spain, Italy and Turkey and ethanol into Greece and France, the latter attracting offers of around $150,000 for 3,000 tons to Lavera, France. Six thousand tons of pyrolysis gasoline from Dunkirk, France, to Priolo, Italy, fetched 210,000 while 2,200 tons of base oils from Rotterdam to Gemlik, Turkey, reportedly achieved $200,000.

Northbound demand has been steady but as with southbound, rates are unchanged. Four thousand tons of toluene from Priolo to Antwerp-Rotterdam-Amsterdam obtained around $200,000, for example. Five thousand tons of vegetable oil from Sete, France, to Rouen, France, finally shipped a couple of weeks later than planned, and 4,000 tons of acetic acid fixed from Bar, Montenegro, to Antwerp. Between 12,000 tons to 15,000 tons of cutterstock and aromatic oil were booked from Aliaga, Turkey, to Antwerp-Rotterdam-Amsterdam, with a further 3,000 tons of C5 from Aliaga to Antwerp-Rotterdam-Amsterdam fixed on a ship coming out of Suez, Egypt. Nineteen thousand tons of pyrolysis gasoline and methanol from Kulevi, Georgia, to Antwerp-Rotterdam-Amsterdam was chartered, and more methanol was seen from Marsa el Brega, Libya. Vegetable oil space is scarce out of the Black Sea and a ship running 3 weeks late was retained nonetheless. Three thousand tons of vegetable oil with high oleic content to Rotterdam achieved low $90s/t.

Prompt space remains scarce in the West Mediterranean along the intra-Mediterranean route, but with no noticeable effect on rates so far. In the Black Sea however, vegetable oil rates have lifted, and 6,000 tons of vegetable oil from the Black Sea to the West Mediterranean achieved $50/t. Biodiesel has been phenomenally active. Caustic is moving from Spain, France, Egypt and the Ukraine. Base oils have been noted from Spain, Italy, Greece and the Black Sea. Benzene is being shipped from the Black Sea and Turkey, and some acrylonitrile was being quoted from Aliaga to Barreiro, Portugal. A big lot of paraxylene concluded from Kulevi, Georgia, to Iskenderun, Turkey.

There is quite a bit of space around on the regular transatlantic carriers, undermining freight levels. Traders have been tinkering with possible cargoes of toluene, pyrolysis gasoline and paraxylene, but few seem capable of decisive action. A cargo of wax was booked from Fawley, U.K., and in all probabilities that ship will take 4,900 tons of solvents that were quoted from Fawley and Rotterdam to Bayonne, Baton Rouge and Houston. Around 8,000 tons of vegetable oil was booked from the Baltic to Havana.

Ships going to the Far East are having difficulty filling this month. Some styrene has been shown around but needing India options too. Small parcels of glycols and butanediol were noted. The next shipment of urea ammonia nitrate to Australia has been quoted, but this one entails more ports.

There are cargoes in this direction, but there are also ships looking to complete. A ship that was running late on 15,000 tons of base oils from Kavkaz to India and the Middle East Gulf appears to have been kept. The rate was reportedly high $50s/t. Three thousand tons of base oils fixed from Livorno to Mumbai, and 7,800 tons of base oils from Fawley and Rotterdam to Yanbu, Saudi Arabia, and Jebel Ali, United Arab Emirates, apparently fixed at $76/t. Another 4,000 tons of hexane fixed out of Constanza, Romania, while 2,000 tons of chemicals from Rotterdam to Al Jubail, Saudi Arabia, went for a little under $250,000. Traders are checking on styrene, paraxylene and mixed xylenes possibilities, and there have been some interesting phosphoric acid quotations from West Africa.

Asia

It has been a better week in terms of demand within NortheastAsia, with many May enquiries quoted. Some of the prompter enquiries have been hard to cover with a bunch of requirements first having been quoted several weeks ago. Three thousand four hundred tons of base oils were noted from Onsan, Korea, to China.

The southbound market remains firm, and cargoes such as 2,700 tons base oils from Ulsan to Manila, Philippines, and 3,000 tons of orthoxylene from Yangpu, China, to Gresik, Indonesia, are starting to grow roots because they have been around for so long without getting covered. Five thousand tons of alpha olefins from Daesan to Singapore is another cargo that remains unfixed, as does a parcel of acetone from Yosu, Korea, to Godau, Vietnam, and 1,500 tons of mixed xylenes and acetone from Yosu to Port Klang, Malaysia. Fifteen thousand tons of base oils were quoted from Onsan to Singapore, with a further 3,000 tons to be transhipped from a deep-sea vessel in Ulsan to Singapore.

Whilst northbound contractual volumes remain healthy, trader business seems a little quieter. Several paraxylene and pyrolysis gasoline opportunities appeared this week, but not in the usual volumes. Seventeen thousand tons of base oils from Dumai, Indonesia, to Ulsan appear to have been covered, and 1,500 tons of base oils were reportedly booked from Sri Racha, Thailand, to Nantong, China. Six thousand tons of unconverted oil was quoted from Bangkok to Ulsan, and various cargoes of glycerine, fatty alcohol and molasses were also noted.

In the intra-Southeast Asia market, there are still some prompt ships around, but there are prompt cargo possibilities too. Biodiesel is still active into South China, while the usual clean petroleum carriers only have the occasional prompt position, the rest being employed until the very end of the month. Parcels of pyrolysis gasoline, paraxylene, benzene and caustic are looking for coverage.

It is an unchanged situation on the transpacific export route, with assorted benzene enquiries seen, but little space until late June. Owners are aiming to fix these in the mid to high $50s/t for 6,000 tons lots from Korea to Houston. Sulphuric acid continues to move to Chile, with rates reported to range from mid $60s to low $70s/t. Base oils have also been fixed to the U.S., but these fetch levels in the $80s/t. The market to Europe remains active, driven by multiple cargoes of biofuels which pay $70s-$90s/t depending upon volume, as well as various parcels of chemicals and base oils to the Mediterranean and Antwerp-Rotterdam-Amsterdam, including what is believed to be a cargo of base oils to Nigeria from Singapore.

There is a lot of cargo to be moved in the regional trade lanes along the India and Middle East Gulf route, and not a great deal of space left. Eastbound is similar, with some large lots of methanol, paraxylene, glycols, ethanol, paraffins, methyl tertiarybutyl etherand base oil noted. Westbound saw a flurry of MTBE requirements, ranging in size from 6,000 tons to 30,000 tons. The usual parcels of glycol, paraxylene, methanol and styrene were noted, and 16,000 tons of aromatics and glycols were seen from India. Five thousand tons of base oils remain unfixed Sitra, Bahrain, to Brownsville, Texas.

This report was originally featured in the May 15 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.