SSY Base Oil Shipping Report


Most trading areas went off the boil over the Easter holidays, but Europe seems to be taking an extended break as all routes out of Europe have been very quiet this week. The United States has taken a breather too, whereas Asia is gradually looking busier.

U.S. Gulf of Mexico
There has been a palpable drop in the amount of business quoted out of the United States over the past couple of weeks, and the evidence lies in the number of ships that remain fully open in the U.S. Gulf still within April.

Last month, it was exceedingly rare to see such positions, but now there are around half-a-dozen within the U.S. Gulf and Caribbean. So far, it has not hit freight rates as there are equally a number of cargoes quoted that prefer April loading. Its just a question of marrying the right ship to the right cargo at a freight level that pleases both sides.

Tonnage trading from the Gulf to the Caribbean, for example, is well covered in general and there is not a huge amount of space around, nor are there that many larger cargoes. It would be a brave owner to commit a ship to this trade with a ship only half full.

The route from the U.S. Gulf to Brazil is quite firm, too. Simple, homogenous cargoes of caustic, aromatics and reformate parcels have been fixing from the U.S. Gulf to Santos in the upper $60s to low $70s per ton for 10,000 to 12,000 ton slugs. A small parcel of base oils could likely fetch a rate with three digits.

Transatlantic eastbound has a quiet feel to it, but there are at least six large cargoes of ethanol quoted, plus a further selection of styrene cargoes. Not all will get fixed because there is not that much space out there. What we have seen are small parcels that fetch in the $70s per ton for 2,000 to 3,000 ton lots, and then the 5,000 ton parcels go for around $60 per ton. Some base oils are quoted, but they are either inter-company transfers or else regular, routine cargoes.

The U.S. Gulf to Far East route is pretty quiet, however, and rates have fallen as a result. Not that there is a big surplus of April space, but May ships are still willing to settle in the mid $70s per ton for 5,000 ton parcels from Houston to the principal Far East ports.

Many European coastal routes report far fewer requirements this week than two weeks ago. The North Sea and Baltic, for example, can boast quite a lot of prompt space, and here and there rates have been seen to be dropping.

Southbound into the Mediterranean, however, bucks the trend. Here, there are numerous requirements and rates remain firm. Base oil demand from Turkey continues to see cargoes fixed from Northwest Europe or the Baltic and rates are in the $70s and $80s per ton for medium-sized parcels.

Northbound has gone flat, however, and there are open ships with space. Rates for 3,000 to 4,000 ton parcels from Southern Spain to Antwerp-Rotterdam-Amsterdam are back into the mid to high 20s per ton again.

Inter-Mediterranean business took a beating, too, with the exception of vegetable oils and clean petroleum, where strong rates are reported. For instance, 5,000 tons of vegetable oils from two Black Sea ports to two Western Mediterranean ports went in the mid to high $60s per ton compared to similar chemicals parcels that fetched low to mid $40s per ton.

Transatlantic westbound remains flat. The only excitement has come from a batch of pyrolysis gasoline/benzene requirements and a couple of caustic movements. Owners are determined to stop freights from sliding, and even though there is some prompt space available, rates remain in the upper $40s per ton for 5,000 ton cargoes from Rotterdam to Houston. There is not so much happening on base oils into the U.S. Gulf right now, though there is some interest in placing material into the Caribbean.

The amount of new business quoted on the Europe-to-Far East route has diminished to the extent that there are prompt ships sailing through the Mediterranean right now with open space. Freights have declined, but not by that much. From Rotterdam to the principal Far East ports, 5,000 ton parcels attract offers in the mid $80s per ton. The Europe to India to Middle East Gulf route is tight on space for prompt loading. Numbers are being seen in the low to mid $80s per ton for 5,000 ton parcels shipped from Rotterdam to the West Coast of India, for example. Base oils do not feature much this week, however.

The domestic Asian market is seeing a reasonable amount of demand overall, but the multiple cargoes of aromatics to China are missing. This has caused rates to solidify on the key intra-Far East routes. A number of small ships are open or have part space within this area.

Export business, however, has made some progress, and there has been more benzene fixed to the United States, for example, over the past 10 days. Rates are nothing dramatic, typically low to mid $50s per ton for 5,000 ton lots and even down into the $40s per ton for the very large quantities into the U.S. Gulf.

However, palm oil freights have lifted somewhat and we see levels back into the $80s per ton for 15,000 ton cargoes into the Mediterranean. There seems to be a steady demand for base oils to Europe, although the number of fixtures will be limited due to the availability of material in Asia.

Rates are in the $90s and low $100s per ton for typical volumes from Korea and South East Asia since the space has to compete with palm oil or biodiesel.

India, Pakistan and the Middle East Gulf have all become sources of base oil for traders wishing to supply Turkey in particular. Freights have come down a bit for smaller parcels compared to a month or so ago, and it is now possible to book 2,000 to 3,000 ton cargoes from the West Coast of India to the Eastern Mediterranean for $120 to 125 per ton.

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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