SSY Base Oil Shipping Report


U.S. markets are heating up again, and space looks tight on all routes for the balance of March. European coastal markets remain busy, but deep-sea trades are unexciting. Asian domestic trades are fairly busy whereas deep-sea markets are soft.

U.S. Gulf of Mexico
It has been another busy week in the U.S. Gulf-to-Caribbean market. Space is restricted to just a handful of vessels for the rest of March, but this tightness is somewhat artificial since it has its origins in lengthy port delays in the U.S. Gulf whereby tonnage is in effect employed waiting for a berth. Whatever the reason, vessel space is scarce and owners are able to keep freights high.

Space is also extremely scarce to the east coast of South America. The way it looks now, there is hardly any remaining space until mid April. Ethanol is the main commodity moving, and since it is usually fixed on a full-cargo basis there is very little space remaining for parcels. Some base oils have been seen looking to move in this direction, and there were also base oils quoted out again from Brazil.

Transatlantic eastbound is somewhat flat. Styrene is occasionally fixed, but ethanol is the main product category. There is not a huge amount of open space, but there are ships that are on berth and seem to be struggling to fill out. Some of the ethanol rates have fallen from high $50s/t to even high $40s/t for 8,000 ton quantities from the Atlantic coast to Antwerp-Rotterdam-Amsterdam, so in the short term even more competitive rates may be achievable.

Nearly all the ships on the U.S. Gulf-to-Far East service in March are full, not through spot business but through heightened contractual demand. Some space remains but it lacks the major approvals necessary for most base oil cargoes. Rates have started to go back up again, and we see 5,000 ton cargoes from Houston to China in the mid $90s/t, and there is talk of even higher numbers to come.

There are some ethanol cargoes quoted from the U.S. to Jebel Ali and depending on how they turn out there could be possibilities to fix any remaining space. Rates for 5,000 ton lots will be close to $100/t.

March has so far been very productive in terms of new business within Europe, and some ships are already booked ahead until the end of the month.

In the North Sea and Baltic, biodiesel and ethanol are among the main grades on offer but base oils have taken a respectable amount of space too. Ice is still an issue in the Baltic. Any ice that melts during the daytime soon refreezes at night.

Mediterrranean routes have been extremely busy too and freight rates have been sizzling. Vegetable oils have been at the fore with freight rates in the $60s/t being achieved for simple 3,000 to 4,000 ton cargoes from the Black Sea to southern Spain. These are virtual records. The same too is happening in the clean petroleum sector where rates are touching $30/t for 10,000 to 12,000 ton cargoes intra-Med. This is almost unheard of too. Base oils are particularly active into Turkey and are fighting for space with cargoes such as styrene, acrylonitrile, methanol and caustic, thereby creating conditions that are ideal for owners to use to increase freights.

The deep-sea picture is more subdued. Transatlantic westbound is impoverished in terms of cargoes, with the principal grades being caustic, sulphuric acid and urea ammonia nitrate, the rates for which are steady at around $46 to $48/t for 5,000 ton parcels from Rotterdam to Houston.

Europe-to-Asia too is a bit quiet, but the few ships that are on berth are steadily filling which stops rates from sagging. Europe-to-India and the Middle East Gulf is a similar picture. Phosphoric acid, ethylene dichloride, aromatics and acrylonitrile have been noted, but few cargoes of base oil.

Domestic Asian markets have fared fairly well over the past fortnight. The flow of styrene and benzene/toluene/xylene into China has not reached pre-New Year levels, but all the same there are still quite a number of opportunities. Rates are not decreasing either, but this may be linked to the price of bunker fuel in Asia which at around $725/t FOB Singapore is one of the highest globally.

Base oils feature rather more frequently these days within Asia, with cargoes shifting around within Southeast Asia as well as appearing on both north and southbound cargo lists. There are also attempts to ship base oils to destinations further afield, such as Turkey, U.S., India and Brazil.

Export rates from Asia are guided chiefly by palm oil freights and these are in decline. From the Malacca Straits to the Black Sea, 8,000 tons of palm oil achieved $80/t, a drop of some $10/t compared to the last shipment. From further up, freights from Korea, Taiwan and China are chiefly driven by chemical demand, but much of this trade is contractual and there is less open space, which means that spot parcels tend to see levels of low-mid $90s/t for 5,000 ton cargoes from Korea to Rotterdam.

The Middle East Gulf-to-India routes are reasonably active. Westbound space is somewhat limited and owners are seeking rates in the $70s for cargoes back into the Med. There is still open space eastbound however, and 5,000 ton parcels from the west coast of India to Southeast Asia are fetching low $30s/t. India seems to be exporting more base oils these days, and there are plenty of Iranian cargoes for those who can trade with Iran.

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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