The U.S. market is fairly active in all directions bar Asia. Europe too put up a strong performance with the exception of routes into Asia. Somewhat unexpectedly therefore, local Asian markets have been busy both locally and on the export scene.
U.S. Gulf of Mexico
February is generating more interest in the U.S. Gulf-to-Caribbean arena. Pockets of space do still exist, primarily for Central American destinations, but levels are not necessarily cheap. A 1,000 ton parcel from Houston to Venezuela, for example, sees numbers in the low $60s/t.
Space on the U.S. Gulf-to-east coast of South America route is classified as tight through much of February, meaning firm freights for smaller parcels.
Eastbound transatlantic remains busy with a variety of cargoes quoted. Rates are climbing – we have seen 3,500 ton parcels fixed from Houston to Rotterdam in the mid $60s/t. Finding front-half February space for base oils to West Africa could be a challenge, but by end February there are a few more possibilities. Prompt loading would cost in the mid-to-high $80s/t for 6,000 to 8,000 ton cargoes to Lagos, as demonstrated recently by some ethanol shipments.
Where freights are showing weakness is on the U.S. Gulf-to-Asia service. Demand has subsided, and we believe it should be possible to fix 5,000 tons of base oils from Houston to principal Far East ports at $60/t or thereabouts.
Europe
In spite of a busy week, freights in the North Sea have not lifted at all, implying a certain nervousness among the owners since there is not a large overhang of tonnage in the area. Perhaps that might come as fewer owners venture into the Baltic due to the worsening ice situation there.
Most of the main base oil ports are covered in ice, often extending offshore. In Kotka, for instance, ice-class 1A ships are required, which is the highest ranking. Liepaja is advertised as requiring ice-class 1C tonnage, but the water temperature is cold and a slightly prolonged spell of cold weather could cause ice to quickly build. Owners are already seeking premiums of 30 to 40 percent to call Baltic ports. Ice has also been a factor in some Ukraine ports too, though to a lesser extent. All the same, the week saw ships stuck for three to four days at a time, though things are understood to be moving again.
Transatlantic westbound sees plenty of demand for chemicals and rates have jumped by around $5/t, with 5,000 ton cargoes from Rotterdam to Houston easily commanding levels of $40/t or more.
Lower demand sees Europe-to-Far East record a drop of about $5/t on rates, meaning levels of around $75/t for 5,000 ton cargoes from Rotterdam to Korea, for example. Numbers into India are unchanged however.
Asia
The domestic Asian market is not showing any sign of restraint in the run-up to the Lunar Holidays. Business is brisk in most directions for now, with China consuming vast volumes of aromatics.
From a base oil point of view, suppliers in Korea and Southeast Asia have to compete for vessel space with the aromatics people, which keeps levels firm. Deep-sea business is strong, with plenty of benzene reportedly moving from Asia to the U.S. Gulf. Rates are holding at around $50 to $52/t for a 5,000 ton cargo from Ulsan to Houston.
Levels are strong into India too – we see small parcels of 1,000 tons from Ulsan to the west coast of India commanding numbers in the mid $60s/t. Good demand for chemicals from the Middle East Gulf and India means that owners can push freights up a bit, and we see fixtures of 4,000 to 5,000 tons from the Middle East Gulf to the Mediterranean at around $70 to $75/t, with even a 10,000 ton cargo paying mid $60s/t.
Adrian Brown is senior market analyst for chemicals and base oils with SSY Shipbrokers, London. Information about SSY can be found at www.ssyonline.com. Adrian Brown, in the U.K., can be reached directly at research@ssy.co.uk or by phone at +44 1207-507507. In the U.S., SSYs Steve Rosenthal can be reached at fix@ssychems.com or +1 203-961-1566.