SSY Base Oil Shipping Report


The U.S. Gulf remains tight on space until November, and heavy demand is reported on the route to Asia. Europe continues depressed with far more ships in the area than required. Asia is experiencing better demand on both deep-sea and coastal routes.

U.S. Gulf of Mexico
The U.S. Gulf is proving to be one of the better areas in which to have open tonnage. There have been many requirements of benzene/toluene/xylene and styrene into the Far East, sending freight rates soaring to around $60/t for 5,000 ton cargoes from Houston to principal Far East ports.

Most scheduled ships are only available towards the second half of November, which means that even higher freights may be necessary to persuade some of the outsiders on berth. The market to Asia is always busy at this time of year as producers aim to reduce inventories, but there also seems to be good demand for these grades as a number of plants in Asia will be having turnarounds shortly.

Transatlantic also sees a fair amount of demand, although more in the speciality line, such as cyclohexane, acrylonitrile, acetic acid and amines. Rates have not really altered much on this route, nor for that matter have they changed much on the other routes such as Gulf-to-Caribbean or Gulf-to-east coast of South America where supply of tonnage is generally well matched with demand for space.

Intra-European markets remain weak. There is ample tonnage available in the North Sea and Baltic regions providing little or no contest between owners and charterers over freight rates.

Southbound into the Med is a bit more interesting with cargoes that would normally be supplied directly from Fos or Lavera but which have had to be sourced from elsewhere due to industrial action that has now entered its 23rd day in those ports. Northbound is thin however and rates are highly competitive.

Inter-Med traffic has been mostly routine with no great changes reported.

Transatlantic westbound has been a bit busier with pyrolysis gasoline, caustic urea ammonia nitrate reformate and base oils. There is also talk of benzene looking to ship to the U.S. Gulf. Numbers are static however. Europe-to-Far East is a bit livelier with some larger cargoes quoted, such a big lots of butanols, paraffins, BTX and styrene. There are still ships with space on this route and freight levels have not changed so far.

Domestic Asian business is beginning to build quite nicely. November loading seems to be more important to some charterers than October, and we see quite some volume of benzene, toluene, mixed xylenes, pygas, phenol and acetone into China for forward dates. Export trades picked up too, especially with benzene to the U.S. Gulf. In addition, there have been yet more fixtures of sulphuric acid to the Americas and several large cargoes of caustic were covered to Europe and the United States.

Palm oil business is quite exciting too. Chinese buyers have stepped forward, acknowledging that stocks are below normal after a slow August and September. India and Pakistan continue to restock too, Pakistan after the devastating floods while Indian buyers have cut out more expensive soya oil from South America. This pattern is expected to continue for some time ahead.

The drawback to all this movement for ship owners is that there are now quite a lot of ships heading to India and the Middle East Gulf which might cause freights to peak from that area. So far, demand has been consistent, especially the local regional trades in and around the Indian Ocean.

Westbound space to Europe is expected to stay tight, simply because owners are reluctant to send their ships to join the queue for cargoes out of Europe. Eastbound may be where a decrease in rates could be felt, although this has not happened so far.

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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