SSY Base Oil Shipping Report


Rates are falling on many U.S. routes due to overcapacity. European coastal routes are steady, but deep-sea trade lanes are sliding. Asia looks a little more active, but only from July.

U.S. Gulf of Mexico
The lack of new cargo requirements and the ever-present overhang of spare tonnage in the region have finally caused freight rates to buckle. The sole exception has been U.S. Gulf-to-Far East trade where a burst of activity has seen mixed xylenes, styrene, ethylene dichloride and even some small lots of base oil hit the market, lifting freight rates back into the $50s/t for 5,000 ton parcels from Houston to principal Far East ports.

Elsewhere, the glut of tonnage has hit the U.S. Gulf-to-Caribbean service where levels have dropped off by $1 to $2/t, although U.S. Gulf-to-west coast South America remains tight through the balance of June.

U.S. Gulf-to-east coast South America has lost some $10/t over the course of the week, partly due to a revision of contractual cargoes and partly because spot demand has been so slow. Rates for 5,000 ton parcels from Houston to Santos are back into the mid $60s/t territory following this shift.

Transatlantic eastbound too has shared the pain, and numbers have tumbled into the mid $50s/t for 5,000 ton parcels from Houston to Rotterdam. Demand is restricted to just a few ethanol cargoes, some used cooking oil and the occasional piece of biodiesel. U.S. Gulf-to-Mediterranean however is exceptionally tight, and 3,000 ton parcels from Houston to Turkey are going in the mid $90s/t for example.

It has been yet another short working week in Europe with the inevitable result that there are a bunch of ships in the North Sea and Baltic areas that are totally open, at least until the next contractual order turns up.

The situation both into and out of the Mediterranean is not as desperate, and while there are still ships with space to fill, there is sufficient business out there to keep the majority of ships employed. Rates are generally unchanged from the previous week. Inter-Mediterranean routes have been reasonably productive, and while not all ships are completely employed, it is fair to say that most have at least a weeks worth of employment in hand with a lucky few already booked into July. FAME, aromatics, MTBE, methanol and acids have provided a large chunk of spot demand, plus vegetable oils and clean petroleum product trades have chipped in too.

Transatlantic rates however have fared poorly over the week, mainly through too few spot cargoes lined up against too many ships on berth. Paraxylene has been fixed out of the Baltic, while several parcels of caustic were covered from the U.K. An 8,000 ton cargo of base oils was heard fixed from Svetle to the U.S. Gulf at an unconfirmed rate in the high $40s/t, which if correct, is substantially below normal levels. Mediterranean-to-U.S. Gulf meanwhile is still very tight, and a similar cargo ex Black Sea would probably be at least 50 percent more expensive to ship.

Europe-to-Asia and Europe-to-India-Middle East Gulf are two further trade lanes that have struggled over the past week. Demand has just failed to get going, and space can easily be found. Thousand ton parcels from Rotterdam to main ports in China have been paying less than $95/t for instance, and a 5,000 ton cargo would probably be snatched up in the low $70s/t. Antwerp-Rotterdam-Amsterdam to the west coast of India is perhaps in the upper $60s/t for a similar parcel.

There are still too many open ships and insufficient new cargoes to stabilise freight rates on the Domestic Asian market.July looks a little more promising, but between now and then we have only seen a handful of aromatics and styrene cargoes into China.Somewhat pleasing perhaps are the number of speciality cargoes within northeast Asia, such as acetic acid, glycols, plasticisers and even some base oils.

Export business is quieter in terms of benzene and styrene shipments to Europe as prices are very similar in the two areas, but there is still a lot of palm oil being moved at strong freights. There is also a growing amount of palm methyl ester to be used in biodiesel, and there are still cargoes of sulphuric acid to ship to the Americas. In addition, there is a myriad of small parcels of solvents, typically, acetic acid, acetone, acetates, acrylates and white spirit from the Far East into Europe. Space is running on the tight side, and freights are typically in the $130 to $140s/t for small parcels from Korea to Rotterdam.

The Middle East Gulf-India region is still busy, although perhaps not quite as busy as before. The evidence is the number of ships open with part-cargo space, especially eastbound into Asia. Freight rates are still solid on this route for now – to ship a small parcel of 1,500 tons from the Middle East Gulf to the west coast of India will attract freights in the $70s/t for example, while to move 5,000 tons from the Middle East Gulf to Singapore will likely result in a freight bill close to $50/t.

Westbound into the Mediterranean and Europe still elicits figures in the region of $145/t for 1,000 to 1,500 ton cargoes from the west coast of India to the Mediterranean, and it will be close to $100/t for 5,000 to 6,000 ton cargoes to Antwerp-Rotterdam-Amsterdam.

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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