SSY Base Oil Shipping Report

Europe is still reasonably busy. The market from the United States to Asia has come unstuck, causing ripples to spread to some other U.S. routes. Asian markets are not particularly busy, but ships are sailing, and rates are generally stable.

U.S. Gulf

There is still quite a lot of space along the Far East route left to fill for end March and the first half of April. Demand, however, is slow and is heavily reliant upon U.S. manufacturing plants coming back on-stream. Five thousand tons of ethylbenzene was fixed this week to the Yangtze River, China, an indicator that styrene is not too far away. Owners are becoming concerned about how to fill their ships and more may be inclined to offer discounts off the rate, even though it is not so much a question of freight and more around product availability. Some vessels have taken ethanol and others fixed ethylene dichloride. Eleven thousand tons of glycol was fixed from Port Neches, Texas, to China in the region of $59-61 per metric ton, showing that rates are in decline presently.

The eastbound transatlantic market gives the impression of being stable at the moment. It does not have the usual styrene, and some of the glycol quotations have failed to materialize, but there have been cargoes of cumene, ethanol, biodiesel, vinyl acetate monomer, acrylonitrile and cyclohexane. Eight thousand five hundred tons of cyclohexane was fixed from Port Neches to Antwerp at $47/t for example, which exemplifies rates at the moment. It would appear that another shipment of base oils to Nigeria has occurred from the U.S. Gulf.

Several ships are hunting for completion cargoes into the Caribbean and Mexico, but generally there is not a great deal of uncommitted tonnage around in the U.S. Gulf. A prompt shipment of 8,000 tons of chemicals from the U.S. Gulf to the Great Lakes in Canada ended up paying $750,000, for example. One thousand five hundred tons of base oils from U.S. Gulf to Rio Haina, Dominican Republic, were understood to have been fixed for the second half of March shipment.

The pace of ethanol shipments to Brazil has dropped away considerably over the past week, according to owners. Instead, there is a new tender for 13,000 tons ethylene dichloride for delivery into Maceio, Brazil, by 25 April. The odd parcel of caustic, glycol and acetone has been detected, and the 10,000 tons of paraxylene from Corpus Christi, Texas, is believed to have gone in the mid $40s/t.

Nothing very much is happening into India from the U.S. Gulf these days. There is some chatter about base oils again, but otherwise it is quiet. There is a considerable amount of space still to fill, and owners are willing to consider levels in the mid $50s/t for 10,000-ton cargoes, could anything be developed.

Europe

Cargo volumes along the North Sea and Baltic routes have been upheld for another week, allowing the majority of vessels to be fixed ahead towards the end of the month, or even into April. The weather in the region has been bad, causing ships to run late with the result that there has been more prompt cargo around than would normally be the case. In this kind of environment, rates have been trending upwards. Moreover, demand for renewables, such as ethanol and biodiesel has not reached its usual volume for the time of year, and should that sector get into its stride, then demand for space could see even more upwards pressure.

Base oils have been moving on a spot basis into the Mediterranean and Black Sea over the past week or so through the southbound route. Demand for chemicals has been fairly strong too, and there is not a great deal of space around. It is therefore quite surprising to hear that 6,000 tons of pyrolysis from gasoline Dunkirk, France to Priolo, Italy, fixed at just 27/t, especially since there was only one workable offer. Two thousand tons of olefins, on the other hand, from Aarhus, Denmark, to Venice went in the region of mid $90s/t.

Northbound demand has been pretty healthy, and pyrolysis gasoline has again provided a number of spot shipments. Fifteen thousand tons of pyrolysis gasoline was fixed from Lavera, France to Antwerp-Rotterdam-Amsterdam, and a further 2,500 tons of pyrolysis gasoline was booked from Venice to Antwerp-Rotterdam-Amsterdam at over 200,000. Two further pyrolysis gasoline shipments, each of 2,500 tons from the West Mediterranean to Antwerp-Rotterdam-Amsterdam, were concluded, and illustrate how just a few days difference can make a significant difference in rate. The first parcel was done at 88,000, while the second parcel, just three days later cost 145,000. Base oils are represented by some oil major movements this week, while the base oil cargo from Kavkaz, Russia, did not go to Rotterdam as expected but went out to the Middle East Gulf instead.

Very little prompt space remains in the Mediterranean, with most vessels booked some 10 days ahead. Rates along the inter-Mediterranean route have shown little change though, with owners seemingly happy enough to fix at established levels. For vessels that are trading in the West Mediterranean, it is quite easy to string together a series of voyages which enable the vessel to reload from the same port as discharge and so on, for perhaps four to five voyages, avoiding any idle time or ballasting, which helps explain why rates have not really changed a great deal. Base oil activity has eased slightly, but there have been five to six requirements all the same.

Transatlantic demand gives the impression of being strong, yet there are several ships that still have March space. It seems some of the requirements, while theoretically workable, are not being finalized. Products such as toluene, mixed xylenes, benzene and pyrolysis gasoline fall into that category, although 4,000 tons of toluene was eventually booked from Priolo, Italy, to the U.S. Gulf in the $80s/t. Five thousand tons of paraxylene from Rotterdam to the U.S. Atlantic Coast finalized for close to $40/t. Four thousand tons of methylene diphenyl isocyanate was fixed Antwerp to Geismar at $130/t, with a further 2,000 tons of methylene diphenyl isocyanate from Antwerp to the U.S. Gulf going for $160/t. Two thousand five hundred tons of wax from Italy to the U.S. Gulf supposedly fetched $170/t. Base oils are not currently being attempted.

Space into the Far East remains largely tight for prompt loading. At least three cargoes of base oils were booked to Asia from Antwerp-Rotterdam-Amsterdam, along with some tallow to Singapore, with rates ranging from low $70s/t to low $90s/t. Hydrocracker bottoms continue to be done to Korea.

Traders are dabbling with sending base oils to India and the Middle East Gulf, in addition to the 9,500 tons cargo that fixed from Kavkaz. There are also some small parcels of chemicals around, in addition the larger lots of vegetable oil from the Black Sea and phosphoric acid from Tunisia. Vegetable oil rates have been into the mid $50s/t, whereas the last phosphoric acid achieved a hugely competitive rate of $34/t.

Asia

Results have been a bit mixed within the domestic Asia route this week. Some routes look to be a bit tight on space, such as intra-Far East, in which a number of cargoes were repeatedly quoted without getting covered, causing rates to edge upwards. They included 2,000 tons of two grades of base oils from Yosu, South Korea, to Taichung, Taiwan, 2,000 tons of one grade of base oils from Onsan, South Korea to Qingdao, China, and 2,000 tons of three grades of base oils from Onsan to Tianjin, China and Yingkou, China, all of which required March loading. Southbound also produced a number of base oil and chemicals parcels, all needing March dates. However, northbound trades are slower, with fewer aromatics quoted this week, and rates are a little lower.

It does not appear to be that busy on the transpacific export route this week. Benzene is said to be unworkable, which is surprising as benzene is being quoted heavily from the Middle East Gulf and India. With Asian styrene plants entering turnaround season, it would be expected that there ought to be more feedstock benzene cargoes out there looking for a home. Space to Europe remains tight, and owners have bullish freight ideas. Three large acetic acid cargoes have now been fixed, with another slightly smaller shipment rumoured fixed. Several shipments of sulphuric acid were booked to Morocco and more biodiesel has been done. Base oils in the amount of 6,300 tons were quoted Singapore to Rotterdam for early April.

Business is progressing well in the regional trades, with freight levels up slightly between India and the Middle East Gulf. There are not that many smaller vessels left trading in this area, and those that remain are seeking firmer freights. Base oils continue to move throughout the area, from Yanbu, Saudi Arabia, Jeddah, Saudi Arabia, Al Ruwais, U.A.E. and Sitra, Bahrain, with possible interest in exporting from India. Space is tight on the eastbound route. Large requirements of paraxylene from Yanbu and India are especially notable, and 10,000 tons of paraxylene was fixed from Oman to Indonesia, the first such shipment for over 15 months. Base oils are being attempted to Asia from the Middle East Gulf. Space is pretty well covered on the scheduled carriers on the westbound service. Benzene is quoted to the U.S. Gulf from Mangalore, India, Sikka, India, Papavav, India, and Sohar, Oman, and a pyrolysis gasoline cargo is believed to have fixed to the U.S. Gulf from Ras Laffan, Qatar. Paraxylene is being tried from India and Yanbu to the U.S. or Mexico. A sulphuric acid cargo was booked from India to Brazil, and another ship is due to take a similar cargo to Morocco. Seven thousand tons of ethanol was quoted from Karachi, Pakistan, to Rotterdam and another base oil shipment looks to be scheduled from Ruwais to Le Havre, France.

This report originailly appeared in the March 21 issue 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.