SSY Base Oil Shipping Report


It has been a much quieter week in all the major markets worldwide as companies watch events unfold in the Middle East and North Africa and then attempt to assess what it means for them and their customers. For most, it has meant a week of observation rather than trading cargoes.

U.S. Gulf of Mexico
Rocketing commodity prices are one reason why the U.S. Gulf has been quiet this week. Another is the fog that engulfed the region, causing lengthy delays. This problem is particularly acute on the short-haul business such as Gulf-to-Caribbean or to Mexico, where trips are short and vessels can easily miss out on an entire round-trip because they are fog-bound at an installation. The U.S. Gulf is already tight on open space and bad weather like this only makes it appear tighter.

U.S. Gulf to the east coast of South America is unchanged from last week, with no new input of tonnage onto the route.

Transatlantic eastbound is quiet with only a moderate number of ethanol and aromatics cargoes fixed. Prompt space remains elusive, and rates are unchanged.

The strength of bunker prices has to be commented upon as one of the major reasons why freight rates are not going down, even though demand is thin. In Houston, the cost of bunker fuel is around $630 to $635 per ton at the time of writing, which works out at over $12,500 per day just to run the engine of a typical mid-sized tanker running on this service. Ships that run on the longer U.S. Gulf-to-Far East route are burning $19,000 per day on voyages that typically last 40 days. In this respect, freights are notionally unchanged on this service too, but in comparison to January the net earnings have gone down considerably.

Ships that ply the North Sea and Baltic routes have not noticed any serious reduction in contractual volumes, although spot business is slightly reduced compared to the previous week. Ice continues to cause delays to ships running in or out of the Baltic.

Southbound into the Mediterranean is mostly tight, although the occasional outsider is available at a slightly more competitive rate. Northbound is quiet, and the Mediterranean is quiet in places too, although there are some ships that have found enough cargo to go through to the middle of March before needing their next employment. As with other routes, freights are unchanged.

Transatlanticwestbound saw a number of naphtha, caustic and base oil fixtures, nearly all at unchanged levels.

Europe-to-Far East continues to see large cargoes of base oils being fixed from the Black Sea and Northwest Europe. Prompt space is limited until later in March. Phenol and acetone continue to ship, and there has been talk of aromatics too. India and the Middle East Gulf are also targets for base oil exporters, with several cargoes booked from the Med.

There has been no sudden stop to Chinese buying patterns, although moves by the government to limit growth will invariably reduce trade. As such, volumes in the domestic Asian market are down slightly, but freights are holding up.

Exports of aromatics to Europe and the U.S. have paused as Asian prices have caught up sufficiently to close the arbitrage window, although traders expect it will reopen again soon. There are still regular shipments of sulphuric acid and caustic to the Americas with numbers in the mid $60s/t for 15,000 ton lots. Freights to Europe are in the $80s/t for 4,000 to 5,000 ton cargoes from Korea to Rotterdam, and expect levels well over $100/t for smaller parcels.

India and the Middle East Gulf continue to churn out vast quantities of chemicals both east and westbound. Methanol can be found moving in both directions, while benzene and caustic are typically seen westbound, and styrene and paraxylene eastbound. Space is limited in both directions but by choosing tonnage carefully it may be possible to obtain levels in the $80 to $90/t range for 3,000 ton lots of base oils to the eastern Mediterranean and between $50 and $60/t to Southeast 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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