SSY Base Oil Shipping Report

The European market has produced a little more activity, and Asian space is still fairly busy, apart from the weeks on either side of the lunar holidays. The U.S. market is strong and some freight rates keep increasing.

U.S. Gulf

The freight trend is still upwards on the routes to Asia. January space is limited, whereas charterers still seek January loaders. Styrene has been the hot item, with freights to Korea in the upper $60s per metric ton for 5,000 tons, although there are reports of $70/t done too from the Mississippi. Ten thousand tons of mixed xylenes from Texas City to Korea is reputed to have paid around $63/t. Cargoes of methanol, ethanol and ethylene dichloride are out there looking for space.

Styrene has been one of the more prominent commodities in demand along the transatlantic route, according to owners, with shipments to both Antwerp-Rotterdam-Amsterdam as well as into the Mediterranean. Glycol is another grade that seems to be attracting a lot of attention recently, with several cargoes fixed into the Mediterranean this week. Large shipments of ethanol, methanol and caustic have apparently been booked, while on the base oil front, 4,000 tons were fixed from Houston to Le Havre, France. Rates are trending in the high $40s to low $50s/t region for 5,000-ton parcels from Houston to Rotterdam.

January has turned out alright in the end, mostly anyway, for owners trading into the Caribbean, but there have not been so many February cargoes, and owners are having to decide how many ships to allocate to the service. Spot demand has focused primarily on caustic, methanol, ethanol, palm oil, small parcels of clean petroleum and some urea ammonia nitrate. Twelve thousand tons of methanol, for example, was fixed from Jose, Venezuela, to Bayonne, New Jersey, for prompt loading at just over $33/t, which is higher than usual levels.

Ethanol retains its position as top spot market commodity on the route into the east coast of South America. There are apparently a couple of charterers who are shipping excess volumes of caustic from the U.S. Gulf into Brazil on a spot basis too, and some styrene and aviation gasoline possibilities have been noted.

There is little January space remaining along the route into India, and traders are checking to see what can be deferred to February instead. A combination cargo of 24,000 tons of mixed xylenes, styrene, hexane and possibly heptane was quoted from the U.S. Gulf to the west coast of India. Others are looking at 1,000 tons to 2,000 tons of butanol from Houston to Kandla, India. An enquiry for 10,000 tons to 15,000 tons of base oils from Pascagoula and Houston to the west coast of India dropped back from the first half of January loading to end January, early February instead. Five thousand tons of styrene was noted from the U.S. Gulf to the west coast of India.

Europe

A little more enquiry entered the market into the North Sea and Baltic during the week, which soaked up the majority of prompt positions. However, cargo volumes have not been strong enough to dilute the list of vessels that are open in the second half of January. Consequently, rates have not really changed, although bad weather is starting to have an impact on voyage times. The clean petroleum market for smaller tankers has improved slightly with fewer prompt open positions noted. The most recent Finnish ice report suggests that new ice formation is rapid in the Bay of Bothnia. For the ports of Kotka, Finland, and Hamina, Finland, ice-class II and a minimum deadweight of 2,000 tons is required.

The number of open ships has reduced on the southbound trade lane. Rates however are still hugely competitive. Parcels such as styrene, caustic, ethylene dichloride, orthoxylene and base oils have been booked this week, the base oils being destined for Turkey. Ten thousand tons of paraxylene, linear alkyl benzene and paraffins were covered from Kotka to Algeciras, Spain, and Augusta, Sicily. Several FAME movements have been done too, ranging from small lots to 10,000 ton slugs. Enquiries of paraxylene, ethanol, aniline, acrylates, vegetable oil and hexene have also been seen.

Northbound demand is slowly starting to build. Five thousand tons of benzene fixed from Aliaga, Turkey, to Gonfreville, France, and some heavy aromatics and C5 were also pushed to Antwerp-Rotterdam-Amsterdam from Aliaga. More benzene was seen from Constanza, Romania, and Aliaga. A couple of pyrolysis gasoline shipments were booked from Lavera, France, and Berre, France. More alkylate and RBHC has appeared from Augusta. Fixtures of wax, caustic, FAME and vegetable oil have been made. Four thousand tons of toluene was noted from Priolo, Italy, to Antwerp-Rotterdam-Amsterdam, and some larger lots of isomerate and kero have been noted from Spain and Lavera. Fourteen thousand tons of pyrolysis gasoline and xylene could be combined from Leixoes, Portugal, to Antwerp-Rotterdam-Amsterdam, and 5,000 tons of methanol was seen from Arzew, Algeria, to Rotterdam.

Improved demand is being seen along the intra-Mediterranean route, except for base oils, which have been quiet for the past week, yet the list of ships open from mid-month onwards is still quite extensive. Several methyl tertiarybutyl ether cargoes were booked. Benzene is looking to ship into Huelva, Spain, from Constanza and from Lavera. Five thousand tons of pyrolysis gasoline from Venice to Barcelona is believed to have gone at around $125,000. Several FAME enquiries from Huelva were covered, with a couple more fixed from Vasto, Italy, and Ravenna, Italy. Several shipments of caustic are being worked towards Italy from Egypt. Methanol fixed from Arzew to Huelva, and urea ammonia nitrate was detected from Damietta, Egypt to Barcelona.

Although not busy, a few more requirements have been seen along the transatlantic route, including a couple of sulphuric acid shipments, toluene from the Mediterranean and Antwerp-Rotterdam-Amsterdam, several caustic potash enquiries, aniline, wax, methyl ethyl ketone, acetone, TDI and some grades of alcohol. Between 3,000 tons and 4,000 tons of acrylonitrile from Aliaga, Turkey, to Peru is believed to have fetched around $200/t. Several interesting base oil opportunities were quoted to Colombia, Peru and Chile, which would normally be expected to be sourced from the U.S. Gulf.

A number of base oil opportunities into the Far East presented themselves this week, but only one, which is a cargo from Antwerp to Singapore and Ulsan, Korea, was heard to be fixed. Ten thousand tons of base oils from Fawley, U.K., and Le Havre to Singapore were seemingly worked at around $63/t, but dates may have dropped back. Another cargo was attempted from the Baltic to Hamriyah, U.A.E., and Singapore, but that too appears to have faded for now.

Styrene has been busy into India and the Middle East Gulf, with a couple of cargoes fixed from Antwerp-Rotterdam-Amsterdam, and several more were observed. Two thousand tons of acrylonitrile fixed from Tees, U.K. to India. Small parcels of solvents have been seen to Jebel Ali, along with some base oil enquiries out of the Mediterranean. Nineteen thousand tons of phosphoric acid was quoted Tunisia to Kakinada, India.

Asia

The domestic markets within Asia see many cargoes that specify January loading, and there are more that are starting to appear for the second half of February. However, all the charterers are trying to avoid the tricky period around the lunar holidays, whereas owners are especially keen on finding employment for their ships around this period. Base oil movements have slowed a little within the core region, but there have been quite a few cargoes targeted towards India and the Middle East Gulf. With January space in short supply in Northeast Asia, owners will be adding premiums onto the usual levels. Freights are also escalating on the northbound route from Southeast Asia, perhaps by a dollar or two. The southbound market is not that active and rates are unchanged, whereas a lack of space within Southeast Asia is causing freights to edge upwards.

There is no benzene arbitrage on the transpacific run along the export route, which is causing several owners to have difficulty in filling out this month. Clean petroleum rates, however, are buoyant, with low $40s/t for example being booked this week from Korea to the west coast of the U.S., which then distorts the rates payable for parcels. Sulphuric acid shipments are still taking place, with reports of an unusual acid fixture from Korea into the U.S. Gulf. The market to Europe is not particularly busy, yet the ships that do go on berth do end up filling for the most part. Parcels that load in Korea and go to scheduled ports in northwestern Europe are a lot easier to cover than ones that entail the ship calling at an outport, with rates perhaps in the $80s/t from Korea, but could easily be $10-20/t higher if the cargo is destined for an unscheduled call.

It has been a fairly active week in the regional markets along the India and Middle East Gulf route. January space is not abundant, and owners are looking to see if they can achieve small freight increases. The number of base oil fixtures from Yanbu, Saudi Arabia, and Jeddah has been significant, with yet another ship ballasting through from the Mediterranean due to the shortage of space in the Red Sea. Eastbound is tight on January space with most of the aromatics quoted from India uncovered, even after the charterers have widening the loading dates. Cargoes of methanol, MTBE, ethylene dichloride, styrene, linear alkyl benzene and caustic have been circulated. Producers in Al Ruwais are quoting 10,000 tons of base oils from Al Ruwais to China, in addition to the usual traders. Westbound space is very tight. With the clean petroleum market now paying $1.6m for 35,000 tons to the U.K. Continent, there is little appetite for owners of larger ships to parcel. Twenty-four thousand tons of sulphuric acid from Dahej, India, to Mejillones, Chile, is claimed to have gone in the low $70s/t. Eighteen thousand tons of benzene fixed from the west coast of India to the U.S. Gulf at $59/t, with further benzene cargoes noted. Additionally, 8,000 tons of monoethylene glycol from Yanbu, Saudi Arabia, to Iskenderun, Turkey, remains uncovered, as does the base oil from Yanbu to Turkey and the parcel of glycols from Rabigh, Saudi Arabia, to Turkey. Between 6,000 tons and 7,000 tons of ethanol was quoted from Karachi, Pakistan, to the West Mediterranean.

This report was originally featured in the Jan. 16 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.