Some owners may be able to pull one or two ships from contractual voyages, or delay things a bit, but they would only contemplate doing so for much higher freight levels.

The U.S. Gulf to the east coast of South America is a good example. Scheduled space is full for prompt lifting, but to lure one of the Caribbean ships on berth may cost up to $70 to $80/t for 5,000 tons, far higher than the $45/t that is the norm for this route. U.S. Gulf to the Caribbean and Mexico could see a premium of $3 to $4/t payable for prompt lifting too.

Transatlantic eastbound is pretty tight too. Levels in the mid-to-high $50s/t are being done for 10,000 ton lots of ethanol from New York to Antwerp-Rotterdam-Amsterdam, which distorts the normal picture. Should styrene start to move from the U.S. Gulf to cover production of a Dutch plant that has declared force majeure, it may end up boosting freights out of the U.S. Gulf too.

The one route out of the U.S. where things have not firmed is the U.S. Gulf-to-Asia route. Demand remains poor and there is a good selection of tonnage to aim for. A 5,000 ton cargo from Houston to principal scheduled Far East ports is slipping into the mid-to-high $50s/t. The U.S. Gulf to India meanwhile is buoyant to the extent that additional tonnage has been slotted on berth. The same 5,000 ton cargo to Mumbai could end up costing as high as $90/t.

Europe
Bad weather delays and/or industrial action have played havoc again with most ships in Northwest Europe. Strong winds have also hit along parts of Spain, Portugal and France, finally moving up to Belgium, Holland and Germany causing delays and berth congestion all the way. Bad weather is not confined to Northwest Europe, either, as many ports in the Mediterranean have been closed or ships have had to seek shelter.

It is common that most ships have accumulated between five and six days delay over the past month, which amounts to a lot of lost sailings and may help explain why the market appears so tight.

In general, freight rates have risen by 10 to 15 percent over the past week or so in the coastal markets, but even higher figures have been seen. For example, a routine shipment of 5,000 tons of chemicals from southern Spain to Antwerp-Rotterdam-Amsterdam normally pays around 80,000, but in the past week has been paying up to 110,000. Ship owners argue they rarely benefit from the lost time and often run the risk of being cancelled for subsequent voyages, and point out that the level of 110,000 is simply a break-even figure anyway.

Transatlantic rates took a bit of a knock this week. Demand is fairly steady, but early March sees more ships that normal on berth, a number of which require completion cargoes. Consequently, freights for 5,000 ton cargoes from Rotterdam to Houston slipped into the mid-$40s/t. Once this batch of ships has sailed, if demand remains positive, levels could creep back up again.

Europe-to-Asia too has seen freights increase on the back of stronger demand. Scheduled space for the first half of March is pretty limited, and it is hard to secure anything less than $80/t for a 5,000 ton cargo from Rotterdam to principal Far East ports. Unscheduled ports load these rates even further, and owners are very unwilling to quote on base oils that originate from the Baltic due to the uncertainty of the timing of the coaster. Good demand is showing up too for India and the Middle East, keeping these levels on a firm basis.

Asia: Trade has quickly resumed in the Far East after the holidays. Many cargoes of xylene, benzene and styrene are destined for China from both northeast and southeast Asia, keeping the local coastal fleets occupied.

Deep-sea business is steady. Traders have come close to fixing benzene to Europe, but freight levels of $70 to $75/t for 5,000 ton lots are just a bit too high to allow the window to open. Biodiesel and palm oil trades are providing a steady flow of cargoes.

The flow of benzene to the U.S. looks to have come to an end, and a couple of ships still have completion space, which could provide some base oil exporters with a reasonable freight opportunity. Something around $48 to $50/t might be sufficient to make a deal work from Korea into Houston.

The Middle East and India are very active with plenty of chemical cargoes. There may be the possibility to slip a small base oils cargo into India from Iran in the low $40s/t for 3,000 tons, but space back to Europe is very tight, and levels may have to be well into the $70s and $80s/t to get such a cargo shipped. Space is also going quickly into Asia with plenty of alternative cargoes quoted. A 5,000 ton cargo of base oils from Iran to Singapore could end up costing mid-to-high $40s/t and around $60/t to Ulsan.

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.