Uncertainty has raised its head again following the dreadful events in Japan, and uncertainty is most definitely bad for trade. Markets were performing well until a few days ago, but now there is less firm business all over.
U.S. Gulf of Mexico
Business had been steadily growing again in the Americas for much of last week. U.S. Gulf-to-Caribbean routes saw more activity, and some prompt cargoes became very hard to cover. It is not all down to an increase in volume. Many ships were so badly delayed by the bad weather in the U.S. Gulf that owners were unable to devise a forwards schedule and so could not offer on business. All the same, those ships that are available are looking quite tight on space.
Gulf-to-east coast of South America also sees ships mostly full on contractual cargoes, interspersed with ethanol deliveries prior to the Brazilian sugarcane harvest. Rates have not moved really on either service.
Transatlantic eastbound saw renewed interest in ethanol, and although not all the prompt space has filled, owners remain very bullish on freights, and it is common to find levels between $70 and 80/ton for 3,000 ton cargoes from the U.S. Gulf to Antwerp-Rotterdam-Amsterdam. High bunker costs will be a contributory factor.
U.S. Gulf-to-Far East was very slow all last week, to the extent that there is now quite a lot of prompt space remaining. However, traders are beginning to talk of aromatics demand, especially xylene and paraxylene. Freights prior to the tsunami were mid-to-high $50s/t for 5,000 ton cargoes from Houston to principal Far East ports, but owners are now pushing for levels back in the $60s/t.
Europe
Demand for space has been good within the North Sea, and there is not a lot of prompt open space available. Bad weather has exacted a toll, with most ships having lost two to three days out of their schedules.
Ice still presents a major headache for those looking to lift base oils and other cargoes out of the Baltic, and freights are high as a consequence.
There was more movement in and out of the Mediterranean for much of the week, although this may have subsided a bit now. Inter-Mediterranean business was looking busier too with further shipments of caustic, MTBE and aromatics.
Transatlantic westbound is still no busier, with just caustic, pyrolysis gasoline and urea ammonia nitrate moving. There were several base oil shipments too, but now traders favour West Africa instead. Nonetheless, owners are forcing through rate increases based on the higher bunker costs which mean that 5,000 ton parcels from Rotterdam to the U.S. Atlantic coast are hitting mid $30s/t.
Europe-to-Far East remains slack, and so far no new business has appeared to fill the handful of ships that have prompt space. Rates have notionally settled a little lower, with 5,000 t lots from Rotterdam to principal Far East ports commanding mid $70s/t, were there in fact any such cargo.
Asia
The past couple of days have seen traders sit back and assess the implications of the grim events in Japan. Product prices have been oscillating as crude has swung one way because of the situation in the Middle East and back again as demand forecasts predict lower consumption in Japan. There is an inkling that aromatics and glycols in particular will react to the plant closures in Japan, but it is just a little early to jump in to ship cargoes.
Exportsof benzene to the United States are predicted to increase since Asian consumption will be less, but again, it is early days.
Even the Middle East Gulf and India regions have been sombre since the earthquake. Last week they were booming with masses of methanol, MTBE, paraxylene and orthoxylene to ship to Asia, but things are on hold a while. Westbound saw a lot of interest in methanol too, with 15,000 ton cargoes from the Middle East Gulf to the eastern Mediterranean fixing at very high levels in the low $80s/t. Caustic and ethanol too have been moving to Europe from India and Pakistan.
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 at fix@ssychems.com or by phone at +44 1207-507507. In the London office SSYs Jordi Maymi can be reached at fix@ssychems.com or +44 20 7977 7560.