No new base oil enquiries have appeared on the run from the U.S. Gulf to the east coast of South America, but this route is at almost full capacity, and there is just no foreseeable space for the next four to six weeks unless an outsider comes on berth. Should that occur, freights may jump upwards, but so far, levels are notionally unchanged.

There are some base oil shipments however fixed from the U.S. Gulf to Nigeria, and there are some possible export cargoes of base oil from Brazil to Nigeria or the Mediterranean.

Transatlantic eastbound too has seen some small parcels of base oil quoted to Europe among the more regular cargoes of ethanol, acrylonitrile and used cooking oil. There are a couple of ships that are already scheduled on berth to service this route, and they still have space which has resulted in a slight drop in freight levels. Instead of rates above $60/t it is now possible to fix this space in the upper $50s/t. However, once those ships are confirmed full, it will probably mean rates move back up into the $60/t territory.

U.S. Gulf-to-Far East is very disappointing. Demand dropped away for much of last week, although there are a few new enquiries of styrene and benzene/toluene/xylene now beginning to appear. This however has not halted a substantial slide in freight. From Houston to main Far East ports, 5,000 ton parcels can now achieve numbers in the low-to-mid $80s/t, with $80/t a distinct possibility.

Europe
The dramatic news of the day has been an announcement from Nordic Tankers that they are being sold to the investment group that also acquired Herning Tankers last year. The prediction we made in our presentation at the ICIS Base Oils Conference in London last month about further consolidation among the owners is certainly happening, and more will occur this year.

In the spot market, rather more in the way of open tonnage has been seen in the North Sea and Baltic this week, which suggests that freights might start to yield soon. No significant decreases are expected at this stage as the core contractual business is still largely intact.

Southbound into the Mediterranean remains pretty busy with a range of cargoes being quoted into both the western and eastern Med. Turkey continues to be a major destination for base oils, and freights for the smaller lots typically work out at around $90/t for 1,000 to 1,500 ton parcels from Antwerp-Rotterdam-Amsterdam. Northbound is not as active as the southbound leg, but owners are content to keep their vessels trading within the Med rather than accept a lower freight to go north.

Inter-Med business has been mostly busy. An occasional prompt position has been quoted, invariably because of weather delays and the cancellation of a subsequent voyage. On the whole, freights within the Med are solid both west to east and east to west.

Transatlantic westbound is a little unusual insofar as rates have slightly increased over the course of the week. A slight rise in demand has been detected for benzene, pyrolysis gasoline and caustic, and coupled with a reduction in the amount of open space on berth, rates seem to have nudged upwards. Traders have been aiming for $40/t basis 6,000 to 7,000 ton cargoes of benzene from Rotterdam to the U.S. Gulf for end-March loading, but owners have not been willing to accept these freights and instead quote levels closer to $50/t. Some base oils demand continues to be seen from Northwest Europe and the Med into the U.S. Gulf and Caribbean.

Europe-to-Far East is dull, and there is little by way of demand. Rates have been falling steadily, and it is now possible to achieve $90/t for 5,000 ton parcels from Rotterdam to main Far East ports. A number of base oil orders have been seen from Northwest Europe, the Med and Black Sea into India and the Middle East Gulf, several of which were fixed. Rates are holding steady on this route, helped by good demand for vegetable oil, pyrolysis gasoline and phosphoric acid.

Asia
Overall, domestic Asian markets have been progressing well. Intra-Far East attracts a lot of interest in aromatics, though still well down on end-year volumes. Rates remain in the low-to-mid $20s/t for 5,000 ton parcels from Korea to mid China however.

Northbound markets are awaiting final contractual nominations before determining the amount of April space. Southbound is by all accounts quite slow and open space can be found. Intra-Southeast Asia services are looking healthy on the other hand. Palm oil movements continue unabated at much the same kind of levels as seen in the past few weeks, both into the Indian Ocean and to Europe.

Asian Export trades look balanced to Europe, thanks to a mixture of good contractual volumes and an assortment of small chemicals parcels, biodiesel and even some base oil business. Rates for 3,000 ton parcels of palm methyl ester from the Malacca Straits to the central Mediterranean are running at around $90/t currently. Some of the base oil traders are looking to achieve $110-115/t for 5,000 ton lots to Turkey from unscheduled ports such as Merak and Jakarta. Benzene is heard to be active to the U.S. from Korea.

The market from India and the Middle East Gulf is running fairly well at present. There are quite a few cargoes quoted westbound again, including base oils, styrene, caustic, ethanol and white spirit into Turkey alone, with further requirements noted to the rest of Europe. Parcels of 3,000 to 4,000 tons from the west coast of India to the Med and Northwest Europe are presently fetching rates of $110 to $115/t.

Eastbound too has perked up slightly. There are some prompt ships with remaining tanks still to be filled, but there are fewer of them this week than in previous weeks. Rates have risen slightly, with benchmark cargoes such as 13,000 tons of methanol from Iran to the Far East paying low $60s/t instead of the high $50s/t that was done earlier this month.

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.