It feels like the U.S. market is treading water currently, with only a minimal amount of fixing taking place. Europe is performing reasonably well, but Asia is rapidly decelerating just before the New Year.
It has been a quieter week along the Far East route, and many U.S. exports to Asia have been shelved because of the holidays in Asia. Moreover, those requirements that have been desired, such as glycol, have run into the problem of product shortages due to production issues in the U.S. and a strong market for those grades within the U.S. A few bits of business have been conducted, such as 10,000 tons to 12,000 tons of acrylonitrile from the U.S. Gulf to China that reportedly went in the $70s per metric ton. More acrylonitrile would be expected to move, except the material is in short supply. Several parcels of ethanol were booked, with more shipments pending. Traders have been looking at 10,000 tons of ethylene dichloride for March loading. A couple of styrene possibilities had been circulated, but with China announcing the imposition of an anti-dumping duty with immediate effect, it is likely that these cargoes will not move. Inevitably, since some anticipated liftings will now not occur, bits of February space have popped up. So far, rates are holding, but levels could come under pressure in March.
Since styrene is unlikely to move to Asia, it could be expected that traders would look more towards shipping material to Europe along the transatlantic route. However, plant outages in the U.S. could preclude those shipments, at least in the short term. Several parcels of glycol have been attempted, should the material be there physically to ship. Eight thousand tons of cumene was fixed from Houston to Antwerp-Rotterdam-Amsterdam in the mid $40s/t, and similar deals are being lined up for March and April. Cargos of caustic, technical corn oil, tallow and fish oil have been seen.
Spot demand to the Caribbean has been patchy and confined to mostly small lots of acetone, caustic and methanol, although 20,000 tons of caustic was quoted from the U.S. Gulf to Jamaica. Rates are flat. One hundred thousand barrels of clean petroleum from Trinidad to Kingston, Jamaica, ended up going on a medium range tanker at $160,000.
The plant outage in Maceio, Brazil, has already attracted three shipments of ethylene dichloride and a similar amount of caustic from the U.S. Gulf to the east coast of South America. Traders were attempting to place a further 14,000 tons of caustic, but a decision has yet to be reached whether more material is necessary. Seven thousand tons of caustic was fixed from the U.S. Gulf to Santos, Brazil, 10,000 tons of urea ammonia nitrate was quoted from the U.S. Gulf to Santos, Brazil, and a parcel of around 8,000 tons of base oils is being studied from the U.S. Gulf to Brazil.
The route to India and the Middle East Gulf has been fairly active, with a couple of 20,000-ton cargoes of ethanol booked to India in the $50s/t. Styrene is under consideration to India, and base oils are still being attempted, including 10,000 tons from Paulsboro, U.S.
The North Sea and Baltic route has been pretty lively this week with a number of prompt requirements noted. Some of these have been caused simply by vessels delaying and being unable to adhere to the loading dates, but at least half a dozen have been from a chemicals producer that had been experiencing some plant issues earlier. Prompt space has tightened as a result, which could see some firmness creep in on rates for cargoes that cannot be deferred. Ice is slowly starting to form in parts of the Baltic, but the main base oil ports are still readily accessible. The situation does require constant revision however.
Southbound demand has been strong, causing some freights to edge upwards. Five thousand tons of easy chemicals from Antwerp-Rotterdam-Amsterdam to Marmara, Turkey, secured low $50s/t, for example. Some of the larger biodiesel cargoes into the West Mediterranean have ended up at pretty much unchanged levels. Base oils have been seen, but most are linked to oil majors supplying term customers.
Fewer northbound requirements have been seen this week, and there are ships showing prompt space. Not all rates are lower however; 6,000 tons of easy chemicals from South Spain to Antwerp-Rotterdam-Amsterdam ended up paying 10,000 more than the same movement in the previous week. Base oils have been seen looking to go to Continental Europe from Italy and Spain.
Space along the inter-Mediterranean route has tightened again for prompt loading, and a few owners have realized that fixing a series of prompt short coastal voyages can be more rewarding financially than fixing a single longer voyage from one end of the Mediterranean to the other. Base oils have been a little slower than in previous weeks.
A substantial amount of material has been booked to go westbound along the transatlantic route, giving a boost to freight levels. Five thousand ton cargoes from Rotterdam to Houston are now seeing numbers in the high $30s to low $40s/t, for example. Products being moved include paraxylene, methyl tertiarybutyl ether, pyrolysis gasoline, benzene, toluene, sulfuric acid, acetone, urea ammonia nitrate, wax, biodiesel, aniline, acetic acid and caustic. Base oils have been noted, with a cargo fixed from the Mediterranean to Cuba, and interest noted to the U.S. Gulf. In addition, there have been base oil fixed from Italy to Tema, Ghana, and the Baltic to West Africa.
February space to the Far East is restricted to just a single ship from Continental Europe and another that has gone on berth from the Mediterranean. Rates are stable, with 3,000-ton parcels to Korea looking at $90-100/t, for example. Most requirements are smaller than this, however, and include acetone, monopropylene glycol, aniline, acrylonitrile, butanediol and octene. Rates for these small pieces are generally strong - 600 tons from Rotterdam to Map Ta Phut, Thailand, for example, paid around $150/t, yet 4,000 tons of biodiesel from Rotterdam to Korea seemingly fixed at a competitive $80/t after having been around since the end of last year.
The amount of interest in sending base oils along the route to India and the Middle East Gulf has diminished a little. A large cargo of base oils had been mentioned from the Black Sea, but it is not thought to have materialized; the ship instead optioned for 6,000 tons of acrylonitrile and hexane.
The number of cargoes being quoted within Asia has rapidly shrunk this week as people travel home and prepare for the Chinese New Year celebrations. Most vessels have managed to find employment that straddles the holiday period, but there are still some ships that need to be covered. Equally, it is inevitable that there will be a number of prompt requirements as nominated ships run late or get stuck in port through bad weather. The holidays are fairly short in places like Singapore, and demand will recover.
Few cargoes are being quoted currently on the transpacific export route to the U.S., which could have an impact on freights. Owners, however, seem unfazed, and some very strong levels in the $60s and $70s/t have been shown for 5,000-ton parcels from Korea to the U.S. Gulf. A number of ships still have space to Europe as well, but there are a myriad of small parcels of acids and solvents quoted that these vessels seem to be slowly filling. Levels are unchanged.
Plenty of cargoes have been registered in the regional markets along the India and Middle East Gulf route, and with space being scarce some routine freights have risen. Base oils continue to be noted from the Middle East Gulf, with 10,000 tons to 12,000 tons believed to be fixed from Al Ruwais, Qatar, to the United Arab Emirates. Eastbound demand has slowed a lot due to the holidays in Asia. Rates still seem steady, or even firm - 15,000 tons of paraxylene from Yanbu, Saudi Arabia, to Haldia, India, reportedly achieved high $40s/t for example. Westbound has been slow, and some owners have opted to keep their ships trading within the region rather than try to send them back to Europe.
This report was originally posted in the Feb. 14 edition of Lube Report Americas.
Adrian Brown is a senior market analyst for chemicals and base oils with SSY Shipbrokers, London, can be reached email@example.com +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.