SSY Base Oil Shipping Report

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Some routes out of the U.S Gulf saw some erosion on freights this week. European markets are nearly all busy. In Asia, there has been some slippage on palm oil rates but domestic chemical business is more interesting.

U.S. Gulf of Mexico
Demand has not been as intense on the U.S. Gulf to the Far East route as it was back in January. We see that prompt requirements are still fairly difficult to cover and so charterers have been maximising the cargo sizes, amalgamating a variety of different products such as glycols, styrene, acrylonitrile and benzene/toluene/xylene into single shipments of 20 to 30,000 tons and fixing an outsider. The rates for such shipments are still over $100 per metric ton but softening for shipments further off, which should see levels come into the $90s/t for March. Some base oils are said to be quoted into Asia but these small lots of 5 to 10,000 tons and will probably incur freights of $115 to120/t.

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Transatlantic eastbound is another route where freights have thawed and rates are back into the mid $50s/t for 5,000 ton parcels from Houston to Rotterdam. Styrene demand has dried up, and while there are a number of larger ethanol requirements, there are fewer compact cargoes that fill the available tanks.

U.S. Gulf to Brazil is still fairly tight on February space thanks to a healthy mix of spot and contractual business. In fact, spot demand has waned with fewer ethanol cargoes quoted. All the same, it does mean that rates remain firm for the balance of the month. U.S. Gulf to the Caribbean is another robust route in which prompt space is minimal. Intra-Caribbean also is busy, especially with palm oil and tallow possibilities. Freights for these kinds of cargo have increased some 30 percent compared to Decembers levels.

Europe
It was another bitterly cold week throughout Europe. Frozen rivers and canals stopped barges from moving to ports and factories, causing delays to both vessels and deliveries that will take time to clear.

Spot freight rates benefited from the confusion and some noticeably high levels were recorded within the affected areas. Generally, the European region had a busy week with plenty of cargo quoted and in many cases a shortage of prompt tonnage.

Deep-sea markets have not been satisfactory for owners. A small increase in freight has been recorded transatlantic westbound, mainly because owners have dug in their heels thanks to bunker prices that are close to $700/t in Rotterdam for 380 cSt fuel oil. A couple of fixtures saw 5,000 ton parcels from Rotterdam to the U.S. Atlantic coast hit $45/t. Caustic, pyrolysis gasoline, benzene, paraxylene, sulphuric acid and urea ammonia are the primary grades moving, but there has been interest in base oils to the U.S. Gulf and Mexico.

Europe to the Far East however has been somewhat flat. There are still several February vessels that could use some additional cargo causing freight levels to sag. There is greater acceptance of freights in the $90s/t now, rather than all being triple digits. A few charterers continue to check on rates for base oils to Asia, but it seems to be harder to construct the deals, in spite of better freight possibilities, suggesting tighter product supply. There have been a few base oil enquiries to India and the Middle East Gulf, but again, with limited supplies, especially out of the Black Sea, there have been hardly any fixtures.

Asia
There is a slight upswing in the amount of domestic Asian cargoes quoted this week. Volumes have not been immense, but it shows that traders are pursuing new sales, especially into China. Small parcels of styrene, toluene, mixed xylenes and paraxylene have been observed. There are also some larger lots of benzene being fixed southbound from Korea down to Singapore along with small cargoes of styrene, butanol, acrylates, ethanol, C9, acids and white spirit.

Northbound sees large volumes of pyrolysis, reformate, MTBE and methanol being shipped into Korea and China. There have been small parcels of base oil among this lot, but nothing particularly outstanding. Asian export business is quiet, which is ominous for all the ships that are currently on the water heading into Asia. Sulphuric acid and molasses are among the larger cargoes, with some interesting smaller lots of acetic acid. Rates for such parcels are stable, typically around $90 to $95 for 5,000 ton lots from Korea to Antwerp-Rotterdam-Amsterdam. Rates are beginning to fall for palm oil cargoes to the Mediterranean and Northwest Europe, and it may only be a matter of time until the parcels rates follow suit.

The market from the Middle East Gulf to the India region has been fairly steady. Eastbound rates are holding. Cargoes of MTBE, methanol, styrene, orthoxylene, base oils and ethanol have all been noted, along with copious quantities of paraxylene to help deal with the shortages within Asia. Westbound sees part-space on a couple of ships heading back into the Mediterranean and Northwest Europe. Regional trades are pretty busy. There is a lot of Iranian base oil fixed into India and the United Arab Emirates and further enquiries noted.

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.

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