SSY Base Oil Shipping Report


The European market has seen brisk trade during the past week. The U.S. Gulf remains tight on January space with good demand reported, and Asia is much quieter in advance of the Lunar New Year celebrations.

U.S. Gulf of Mexico
There are undoubtedly a large number of requirements from the U.S. Gulf for January, but there are not many ships around to service the demand. Certainly on the U.S. Gulf to Far East route there is an impressive list of orders, mostly consisting of 10,000 ton cargoes or larger and ranging from acetone and acrylonitrile through aromatics, ethylene dichloride, glycols and styrene.

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As with last week, unless a charterer can look at second -half February loading, the rates on these cargoes are all well over $100/t. One of the issues with the Gulf is that demand is strong in virtually every direction and therefore, to an extent, transatlantic traders are competing with those wanting space to South America, who in turn are competing with those looking to the Caribbean, and so on.

This week we have not seen rates really change out of the Gulf, perhaps because so few fixtures were actually concluded. Or maybe it is because traders and end-users have less appetite for a hefty freight bill. Transatlantic eastbound for example started the week with a run of styrene the levels for which were being tentatively fixed at around $50/t, but such levels proved elusive and the styrene fell away, but only to be replaced with large lots of ethanol also paying around $50/t, but the ethanol seems more sustainable at these levels.

The U.S. Gulf to the Caribbean too had a busier week, especially with small parcels of clean petroleum, while levels from the U.S. Gulf to the east coastof South America have been in the low to mid $70s/t for 5,000 toncargoes from from Houston to Santos. Ethanol, styrene, caustic and some base oils have been detected heading in this direction.

All the principal European coastal trading routes improved in the amount of business quoted, ultimately leading to a much more bullish market. In some cases, freight levels rose by 10 to 20 percent over the course of just a couple of days.

Inter-Mediterranean markets were especially busy, and cargoes that used to go for 55,000 were fetching 68,000, others that would typically pay 100,000 were suddenly commanding 130,000, and so on. From being open in prompt positions, a lot of ships have moved to end month positions. Vegetable oils have been especially active in the East Mediterranean, while biodiesel, aromatics, caustic and base oils have been busy all through the Mediterranean.

The market in the North Sea and Baltic is much tighter on space too in response to the surge in demand, while freight levels southbound into the Mediterranean as well as northbound to northwest Europe both reacted strongly to the extra volumes. Base oils have seen some renewed interest into Turkey too. Transatlantic westbound has not been so busy however. An attempt was made to open the arbitrage window for benzene, but levels in the high $30s/t for 10,000 toncargoes from Rotterdam to Houston failed to stimulate the trade and it soon fell away. Base oils have been encountered however, as has caustic, naphtha, reformate and urea ammonia nitrate.

The Europe to Far East market is still devoid of open space, and traders with smaller parcels are hoping that others will be able to compile a cargo of at least 10,000 tons and then they stand a chance of taking any remaining space. Rates are typically $100 or more for the 10,000 toncargoes from Antwerp-Rotterdam-Amsterdam to China, but not that much more for 5,000 toncargoes. As with the U.S. Gulf, booking late February space now brings that down into the mid to high $90s/t. The Europe to India-Middle East Gulf route is seeing firm freights too, driven by large lots of vegoil from the Black Sea that pay anywhere from $70/t to $90/t, depending upon size of cargo. Base oils, pygas and phos acid have also been active.

With the Lunar holiday just around the corner, the domestic Asian market is expected to jump forward into February. That said, there does seem to be some late fixing taking place, as well as several plants that came back up after turnaround that seem to be generating a bit of demand.

Space is not really a problem though. There are sufficient small ships able to handle the 2,000 to 3,000 tonparcels, while the larger lots are catered for by the influx of tonnage bringing cargoes in from Europe, U.S. and Middle East Gulf. A few base oil parcels have been seen northbound from Southeast Asia, as well as pyrolysis gasoline, MTBE, styrene and clean petroleum.

Rates are all pretty flat and show little change from previous weeks. Asian export business has not been that significant. Aromatics do not really work while palm oil demand is waning, causing freights to weaken. Some sulphuric acid continues to move to the Americas, and there has been some base oil fixed to the U.S. again. Demand for space out of India-Middle East Gulf has not kept pace with the supply of tonnage, and rates westbound have dropped slightly. Eastbound however is holding for now, although there are some gaps that need to be filled.

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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