SSY Base Oil Shipping Report


Freight rates out of the U.S. Gulf are lower, owing to a greater supply of tonnage. European trades have been slow, and the same is true of Asian markets.

U.S. Gulf
As expected, not all the prompt tonnage that came open in the U.S. Gulf has been able to find cargoes back out again, and with a further batch of ships fixed into the region for mid and second half May, the supply/demand balance has tipped firmly towards oversupply. Rates on the eastbound transatlantic route have already registered small decreases, taking numbers for 5,000 ton cargoes from Houston to Rotterdam back towards mid $60s per metric ton.

Owners are still clinging on to rates in the mid to high $60s/t for unscheduled ports, such as Lake Charles and Port Arthur, but it will depend upon how much styrene and ethanol gets quoted this week as to whether they can resist further freight decreases.

Levels are fractionally lower on the U.S. Gulf to Far East service too. For some aromatics cargoes, levels have been fixed at around $55/t for 5,000 ton shipments from Houston to Mainport Far East, and although there is still some open space remaining for May, rates may now have reached the bottom. The reason is that with bunker costs as high as they are – unless the ship happens to be calling at the required berths – there is little contribution, if any, to the entire voyage were rates to decrease further and it would be in the owners best interests to sail with the space.

U.S. Gulf-to-east coast South America has been busy, especially with ethanol, but this trade is expected to cease shortly as some 200 of the 335 sugar mills in the south and central part of Brazil have started work on processing the new harvest of sugarcane. As it is, there are several ships able to offer on parcels to Brazil and Argentina which may put further downwards pressure on rates in this direction.

More prompt space has opened up in Europe as a consequence of yet another short working week. So far, owners have been able to avoid reducing freight levels, at least in the North Sea and Baltic, but the Mediterranean is a highly competitive arena and it may be that should reductions occur then this will be the first area to experience it.

Transatlantic westbound has seen yet more pyrolysis gas fixed, and there has been interest in paraxylene, urea ammonia nitrate, caustic, naphtha and reformate. Rates are steady on the whole on these kinds of cargo.

Europe-to-Asia is not that busy and there is still some open space in May. Freights appear to have stabilized, however. It is quieter to India and the Middle East Gulf, however, and several scheduled ships can offer May space as well as a handful of outsiders who wish to fill the balance space on their ships. This may lead to a reduction in freight levels over the next week or so.

It has been another slow week on domestic Asian markets. The only consolation for ship owners is that Chinese oil refiners are diverting much of their output away from Chinese domestic chemical manufacturers in favor of fuels production that at some point there will be a shortage of chemicals within China that imports will have to be considered again. In the meantime, freight rates continue on a soft note.

Export business has been more promising, however. Styrene is again looking to ship to Europe, and biodiesel has accounted for more tonnage into the Mediterranean and Northwest Europe. Freights are roughly in line with previous weeks.

Aromatics have been seen to the U.S. Gulf, including orthoxylene to Mexico, and sulphuric acid and caustic are finally being shipped to the Americas again. Palm oil trades are busier, especially into India, Pakistan and Bangladesh. Freights levels are $26 to $27/t to east coast India and high $20s and low $30s/t to west coast India for 10,000 to 12,000 ton lots. The Middle East Gulf-India region remains hugely busy with masses of demand but not much open space available. Rates remain firm into both Europe and Asia.

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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