SSY Base Oil Shipping Report


Demand has kicked in after the initial uncertainty following the earthquake in Japan. Now that traders have a clearer picture of pricing, we see the markets in Europe and the U.S. Gulf of Mexico as distinctly busier, whilst Asian markets are no less active than before.

U.S. Gulf of Mexico
There has been a steady increase in the amount of trade generated from the U.S. Gulf. At one point it looked as there could be a surplus of tonnage in the area, but now it is rare to see a ship fully open in the U.S. Gulf. The Caribbean has produced a string of fixtures both in and out as the weather has cleared and the terminals have not been so congested.

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U.S. Gulf to east coast South America is fairly tight on space, with one regular owner taking on an additional smaller ship for a voyage to help clear the backlog of cargoes. Ethanol has been one of the major products moving into Brazil, there being a shortage there and the new harvest not having been processed so far. A cargo of 7,000 to 8,000 tons of aromatics and aviation gasoline from Houston and the Mississippi to Argentina went for over $110 per ton, indicating the strength in freight rates at the moment.

Transatlantic eastbound is busier with nearly all the March positions having filled. Ethanol, biodiesel and some aromatics have been noted, with owners quoting levels of $65 to $67/t for 10,000 tons of aromatics from Mississippi to Antwerp-Rotterdam-Amsterdam.

U.S. Gulf-to-Far East has experienced greater demand for aromatics this week, especially for mixed xylenes and styrene. Several ships can offer March space in the $50s/t for 5,000 ton cargoes, but rate ideas jump into the $60s/t for first half April.

Prompt space has been fairly scarce in the North Sea and Baltic over the last couple of days. Contractual demand is strong and ships traversing the Baltic are encountering thick ice and slower journey times. Freights are firm, especially for ports where ice-class is essential.

Northwest Europe-to-Mediterranean is running well with steady demand. Biodiesel has been the product of the week, with a number of fixtures seen into Spain, France and Italy, but also back northwards again from Spain into the United Kingdom and Antwerp-Rotterdam-Amsterdam. In the Mediterranean, space has tightened quite quickly so that cargoes requiring end March shipment from the West Mediterranean into Greece, Turkey and Black Sea have been left somewhat in the lurch. Rates have strengthened in places.

Transatlantic westbound is not so active. Several further caustic parcels were booked into the U.S. Atlantic Coast, but pyrolysis gasoline demand has waned and been replaced with enquiries for toluene and paraxylene. Numbers are still in the mid $30s/t for 5,000 ton cargoes from Antwerp-Rotterdam-Amsterdam to the U.S. Atlantic Coast.

Europe-to-Far East has not really seen any substantial increase in demand in the small parcels trade. While the large tanker sector has seen some increase in clean petroleum volumes fixing to Asia, the small tanker and parcels trade has not really seen any notable increase in demand, except for base oils where demand is still reasonably strong. Some of the enquiries into Japan itself will be hard to fix, however, due to owners reluctance to send ships there until the threat of radiation has been contained.

Domestic Asian markets have been surprisingly busy given that Japan is an important exporter of material locally. Much of the demand has centered on Taiwan and China again. Paraxylene is particularly active into Taiwan, but there have been other aromatics such as mixed xylenes shipping northwards into China from Thailand. Force majeure has just been declared on a large glycol plant in Singapore that will undoubtedly provoke some interesting shipments both in and out of the region.

Aromatics prices rose a bit too quickly to allow any benzene to be exported to the United States this week, but there is a good chance it will open up soon. India and the Middle East Gulf is a hotbed of activity. Methanol and MTBE is mentioned moving westbound to Europe, but these commodities are also in favor eastbound with something like 80,000 tons of methanol looking to ship in the next week or so to India, Singapore, China and northeast Asia. Rates are firm and it is common to see levels in the high $50s/t for 15,000 ton cargoes from Iran to mid China.

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 at or by phone at +44 1207-507507. In the London office SSYs Jordi Maymi can be reached at or +44 20 7977 7560.

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