SSY Base Oil Shipping Report


Business is starting to trickle in after the long U.S. Thanksgiving holiday. European markets went quiet about the same time, but are also starting to see more activity now. Asian markets are still a bit subdued.

U.S. Gulf of Mexico
It had been a relatively busy period leading up to the long Thanksgiving weekend, but of course everything was put on hold until the return. Business is starting to pick up again, but traders are wary about flooding the market with enquiries that do not stand a chance of being covered because of insufficient space.

Just about all the scheduled space from the Gulf to the Far East has been taken in December, which means paying an incentive to owners to make it worth their while to send small ships in the direction. Glycol traders appear to have a lower pain threshold than other petroleum chemicals traders, and several have been noted fixing 10,000 ton cargoes of glycol to China at $100/t or more. Styrene, orthoxylene and paraxylene have been linked to a couple of outsiders too.

Transatlantic eastbound is steady for now. Several large cargoes of ethanol have been noted, and there have been reports of styrene being shipped too. Rates have yet to diverge much from where they were.

The same applies to rates from the U.S. Gulf to the Caribbean and to the east coast of South America. In the case of cargoes into Brazil, there are a couple of ships that do have small amounts of space that could suit a 3,000 to 5,000 ton cargo, but larger cargoes will have to wait unto second half December when an extra vessel has been put on berth by one of the regulars, although they aim not to send it further south than Santos.

With the U.S. off, the amount of new business quoted within Europe late last week dropped off substantially. Domestic European business is making a comeback but deep-sea business is still a bit slow so far. Freight levels have not gone down however.

Europe-to-Far East for example may see a bit of prompt open space, but far from driving the rate down, owners maintain a bullish stance and think they can squeeze more out of the situation. In an extreme case, a parcel of about 3,000 tons was worked from the Mediterranean to China at the outrageous level of $260/t, but did not eventually come to terms for reasons other than the freight. Generally, $95 to $100/t seems to be the cut-off point at which traders shy away from going further, for 5,000 ton cargoes anyway.

Europe-to-India-Middle East Gulf is enjoying a good period of demand, and there have been a number of base oil cargoes fixed in this direction. Rates are well into the $70s/t for 5,000 ton cargoes from Antwerp-Rotterdam-Amsterdam to the west coast of India, although there are suggestions that even $100/t has been paid from the Mediterranean for a slightly smaller volume.

Transatlantic volumes are steady, yet rates continue to creep upwards, driven primarily by the overall tighter vessel availability. Base oils can be seen still looking to go across to the U.S. Gulf from Northwest Europe. Parcels of 3,000 to 4,000 tons from Rotterdam to Houston currently fetch upper $40s to low $50s/t.

Some suggest that export business from Asia may be a bit quieter, and point to a couple of open positions in December as evidence, especially since the owners are willing to take any cargo in any direction. However, it could also be interpreted as a desire by the owners to make sure the ships are all covered for the holiday period.

So far, the rates for palm oil and biodiesel to Europe remain robust, with typical numbers in the $70s and $80s/t for large lots into the Mediterranean and Northwest Europe, with a handful achieving $90s/t still for 10,000 to 15,000 ton cargoes.

Rates into India and Pakistan are firm as well, with 10,000 to 15,000 ton palm oil cargoes paying high $30s and low $40s/t. Spot aromatics business may be a bit thin to Europe and the U.S., but there are still some base oil and wax requirements noted.

Domestic Asian markets are often reported as quiet these days, yet all the same there are still large volumes of mixed xylenes, paraxylene, benzene and toluene needing to be shipped into China in December, along with other grades such as phenol, acetone, glycols and base oils. Freight rates have certainly not gone down for these local movements.

The Middle East Gulf-India region looks stable for now, especially westbound. Eastbound has a few pockets of prompt space, but gradually more demand is coming to light as various plants come back up. The hardening of sanctions against Iran to include petroleum chemicals could have a serious impact on the regions trade however.

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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