SSY Base Oil Shipping Report


There is still a certain amount of tightness in vessel space in the U.S., and the Mediterranean continues to be active in Europe, but overall there is less new business quoted in either area this week. Asian markets are steady, if unspectacular.

U.S. Gulf of Mexico
The U.S. Gulf-to-Caribbean market is one of the more lively areas. Most ships have a forward program, but a few still can manage to accommodate parcels of 2,000 to 3,000 tons. Among all the vegetable oils, tallow, yellow grease and chemicals, there have been a couple of small base oil requirements into Mexico and the Caribbean. From Houston to the east coast of Mexico, 5,000 ton parcels will typically see rates between $25 and $28/t.

Rates into Brazil are firm, with the same 5,000 ton parcel costing mid $70s/t. This is because most scheduled carriers have filled with contractual cargo so the balance space is quite highly prized. However, there is not a lot of spot business out there currently. If spot business declines further, it is conceivable that these rates might weaken.

Transatlantic eastbound looks a bit more subdued into Northwest Europe. Ethanol is the main grade here, but Europe will be introducing revised, more costly tariffs on E70 and above ethanol blends from the beginning of April, and this will perhaps reduce the amount of ethanol shipped. That is unless U.S. exporters limit the ethanol content to 69 percent and try to slip below the new regulations.

Meantime, rates for 5,000 ton cargoes from Houston to Rotterdam are touching $60/t, but there are still a number of ships open within March, and more are scheduled into the U.S. in April, which might also suggest some freight reduction could occur soon.

U.S. Gulf-to-Far East is unquestionably tight for March lifting, but April looks to have more open space, and already forward enquiries reveal that owners may be willing to accept levels in the mid $80s/t for 5,000 ton parcels from Houston to main Far East ports, down from the March levels of $90/t.

There has been a distinct drop in the amount of new requirements quoted in the North Sea and Baltic this week. This does not automatically mean owners are in distress and that rates will drop, since many ships are already booked well ahead. What it does mean though is that ships that are on the fringe are beginning to reassess rates downwards slightly, though bunker prices are still in excess of $710/t FOB Rotterdam, which limits downwards potential.

Southbound into the Mediterranean remains strong, with lots of demand. Base oils are included to some extent, though traders seem to be having difficulty locating enough spare material. Turkey is developing into a major buyer of base oils, as well as other commodities such as styrene, ACN, acetic acid, solvents and glycol.

Northbound from the Med is equally as strong, helped by the fact that inter-Med demand for space is firm, and consequently owners are less inclined to send ships up north. Freight levels are high for inter-Med cargoes, with rates typically in the $50s and even $60s/t for 2,000 to 3,000 ton shipments from the western to eastern Med.

Transatlantic westbound is slow, but there are not that many attractive parcels for outsiders to come on berth, and so rates remain unchanged. Several base oil cargoes can be counted among the other products that are being moved, such as C7, biodiesel and UAN.

Europe-to-Far East sees almost no new business at all quoted this week, which is of concern to the owners with April tonnage. Unless demand improves, rates are likely to slip next month.

Most ships are covered for the balance of March on domestic Asian services, with only a few really prompt open positions. Base oils do feature more noticeably, with enquiries both northbound from Southeast Asia and back southbound from Korea and Taiwan. Freights within the region do not seem to have altered much over the past week.

Export business is still pretty busy with palm oil and biodiesel, the rates for which are holding in the $80s and $90s/t for smaller parcels to Europe. Freights from Korea to the U.S. Gulf are more competitive however, with numbers holding in the $60s/t for 5,000 to 6,000 ton parcels of easy chemicals.

The market from Asia to India however is quite strong, and it is common to see levels in the high $60s and low $70s/t for 2,000 to 3,000 ton parcels from Southeast Asia. Trade out of India and the Middle East Gulf region is reasonable. Rates for 3,000 to 4,000 ton parcels from the west coast of India to the Mediterranean have come off a bit to around $120 to $125/t, while rates from the Middle East Gulf to the Med for similar parcels are well below $100/t.

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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