SSY Base Oil Shipping Report


The U.S. Gulf market is beginning to tighten up, although freights are unchanged so far. Europe is completely over-tonnaged and demand for space is poor. Asia continues to buck the trend and remains the most active region globally.

U.S. Gulf of Mexico
One by one, the ships are being fixed away from the U.S. Gulf and are not being replaced. Unless there is a significant swing upwards in the number of ships bringing cargoes into the Gulf, the region will be fairly tight on vessel space by mid July.

None of the fixtures that have got the ships away so far have been fancy, and indeed one or two have been ugly. It is not the time for ship owners to be fussy, however, but to give them credit they have managed to cover the majority of imminent open positions. A slight uptick in the amount of business into Mexico has helped, which has boosted freights by several bucks. From Houston to the east coast of Mexico, 3,000 tons of base oils would now cost in the high $30s per ton, for example.

Movements into Venezuela are very slow, leaving plenty of open space. Bargain freights can be expected. A prompt cargo from the U.S. Gulf to Brazil could reap a competitive freight on one of the two outsiders on berth.

Eastbound transatlantic is tighter for July, but rates for a 5,000 ton cargo from Houston to Rotterdam are still in the low-to-mid $40s/t. U.S. Gulf-to-India is much tighter for July, but there is still open space to the Far East. Numbers are very notional; a firm requirement for 5,000 tons to Korea, for instance, could just about possibly see a level in the $40s/t.

It has been one of the quietest weeks of the year so far on the European market. Ships trading in the North Sea and Baltic have not been too adversely affected due to the contractual nature of business there, but down in the Mediterranean it has been much harder for owners to string together a programme for every ship. There are vessels of all sizes idle. Rates have inched lower, but owners would rather walk away from business than run the ship at a guaranteed loss.

Deep-sea put on a dismal show too. Transatlantic saw very few firm cargoes to the United States. Base oils probably ranked one of the most popular cargoes, alongside naphtha and reformate. Rates for 5,000 ton cargoes from the western Mediterranean to the U.S. Gulf are probably not much more than $40/t.

Europe-to-Asia is also in the doldrums. Very few commodities seem to be in demand right now, leaving a lot of open space. One or two owners who have tonnage in the area could be tempted to look at levels in the $60s/t for 5,000 tons, but this is not across the board. Rates are typically mid $70s/t, but in this kind of situation there may be the chance of an exceptional deal.

Europe-to-India appears unchanged for now, but with less phosphoric acid to ship during the July-to-September campaign, rates may well come under pressure.

Demand for outbound vessel space is good from Asia, which should act as a lure for ship owners. The problem is that there is so little business heading in that direction from the West, meaning only a few potential candidates for most cargoes, which in turn leads to firm freight ideas from ship owners. Benzene and possibly pyrolysis gasoline are being discussed back to Northwest Europe from Asia for July, with levels working out at around $70/t from Korea and $60/t from Southeast Asia for 10,000 ton cargoes.

Base oils have been mentioned as possible cargoes back to Europe, but they would have to compete for space at these kinds of levels.

Numbers have been fairly firm into the U.S. too, and we have seen freights of close to $60/t for 5,000 ton cargoes from Korea to the U.S. west coast. Palm oil demand is being ramped up too, with more local cargoes as well as to the West, ensuring space stays scarce.

The Middle East Gulf and Indian Ocean are busy areas. Space is particularly tight back into Europe right now.

Adrian Brown is senior market analyst for chemicals and base oils with SSY Shipbrokers, London. Information about SSY can be found at Adrian Brown, in the U.K., can be reached directly at or by phone at +44 1207-507507. In the U.S., SSYs Steve Rosenthal can be reached at or +1 203-961-1566.

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