Unfortunately, the recent trend of sending ethanol cargoes to Europe may be in jeopardy if the tax credit system for U.S. ethanol producers is removed at the end of July. Another aspect to this is that the import duty on Brazilian ethanol imports would be removed at the same time, which could spur more tonnage into the U.S. Gulf. Unless there is a dramatic increase in chemical exports, the U.S. Gulf does not look an encouraging place to be for owners.

Other eastbound transatlantic business is flimsy, with talk of styrene to come, but no real evidence so far.

With the removal of the tax credit, Gulf-to-South America may also see fewer ethanol shipments, although the Brazilian cane harvest was reported to be poor, and domestic Brazilian demand is high, which might therefore bring some relief to ships stuck in the U.S. Gulf. The matter will probably be determined by the Brazilian car user who will opt for the cheapest fuel.

There is not much to report on the Gulf-to-Caribbean route apart from most owners still have prompt space.

Gulf-to-Far East does not appear that busy, yet a couple of acetone, acrylonitrile and aromatics cargoes were all it took to fill the remaining July ships. For anyone wanting to ship larger parcels in July it would have meant taking an outsider on berth, yet that would have entailed paying freights in the $70s and $80s compared to the ships already on berth where rates in the $50s and $60s/t had already been achieved. With August turning up a bunch of scheduled ships, most traders have opted to defer shipments until August.

Europe
The flow of business in the North Sea and Baltic has continued unabated with relatively few open positions, although this seems to be changing as we come closer to August. The Mediterraneanis a similar scenario. Space is generally well booked ahead and there have been plenty of requirements, but the main holiday month is fast approaching and Spain, France and Italy are prone to reduced demand during this time. Moreover, Ramadan is early this year, commencing 1^st August, which will impact demand from Turkey, Egypt as well as North Africa.

Perhaps the only ray of hope is that some traders believe that they will be busier in August as they suspect lower demand should trigger lower commodity prices which make it more attractive for buyers to stockpile. There may be method in the madness as we have seen this happen in previous years, with business slowing down only in September, prior the Q4 price negotiations.

Transatlantic westbound has been poor with too many ships chasing too few cargoes. A couple of 10,000 ton slugs of benzene were booked from Northwest Europe to the U.S. Gulf in the $31 to $33/t region, typifying freight levels at the moment, especially as Terneuzen looks to have been a loadport. That said, the lowest rate seen on 5,000 tons of paraxylene from Rotterdam to Wilmington was low $40s/t.

Europe-to-Asia is sluggish, although, as with the U.S. Gulf-to-Far East market, there is not that much prompt space remaining open. A number of ethylene dichloride, ethanol, base oil, phenol and acetone cargoes have all been quoted into Asia.

Europe-to-India has been slow but steady. The phosphoric acid plant in North Africa looks to have resumed production again, and several ships have been fixed to India with acid. Pyrolysis gasoline, acrylonitrile and ethylene dichloride have also been discussed, with some talk of base oils too from the Baltic.

Asia
The domestic Asian market is steadily improving with more cargoes of paraxylene, styrene, phenol and glycol being shipped into China and Taiwan. There is also a reasonable trade south into Southeast Asia with items such as caustic, aromatics and solvents, as well as clean petroleum products. Freight rates appear to be recovering a bit after so many weeks of inactivity. There are also a number of northbound cargoes from Singapore, Indonesia and Thailand such as aromatics and MTBE, and again, rates seem to be stabilising.

Deep-sea activity is where Asia is perhaps at the pinnacle of world trade. Substantial volumes of sulphuric acid are shipping to the U.S. Gulf and South America. Base oils are being done in this direction too, with numbers depending upon size of cargo, but it is not uncommon to hear levels of $150 to $160/t for 3,000 ton parcels to Brazil, for example. Many parcels of acetic acid, thermal phos acid and ethyl acetate continue to head to Europe for freights in the $135 to $145/t region for 2,000 to 3,000 ton quantities. Biodiesel and palm oils are moving in sizeable quantities to Europe too with high freights reported.

Freights have gone down in the Middle East Gulf-India region both east and westbound, but already strong demand is causing some owners to rethink their freight ideas. Small parcels from India to the Mediterranean continue to see rates in the $130s and $140s/t, while 5,000 tons was done to Northwest Europe at $90/t, and 15,000 tons of methanol fetched low $70s/t into the Mediterranean.

Low $50s/t were recorded on some 10,000 ton parcels from the Middle East Gulf to Northeast Asia, but equally there were reports of upper $50s/t for 15,000 tons. Timing and discharge options play an important part in determining freight. Iran also commands a solid premium over other Middle East Gulf loadports.

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.