U.S. markets continue to tighten and some freights have risen. Asian activity has started to reassert itself, while European markets are bouncing about, some routes up and others going down.
U.S. Gulf of Mexico
The main area of activity has been the U.S. Gulf-Far East route where sizeable cargoes of paraxylene and ethylene dichloride have been fixed. Rates have increased, and a parcel of 10,000 tons of paraxylene was fixed from the U.S. Gulf to mid-China in the mid-to-high $70s/t. In addition, the ship took a cargo of 3,500 tons of base oils in the low $90s/t.
March space remains scarce, and scheduled space only begins to appear in April.
Transatlantic eastbound is reported to be seeing greater interest in small parcels of petrochemicals with one or two requirements of styrene. Rates will be similar to those of the past week or two.
U.S. Gulf-to-east coast of South America is still fairly active on the parcels front, with cargoes of styrene, caustic and monoethylene glycol mainly. Ethanol southbound has taken a back seat this week, and there is not as much base oil talk. Instead, there are supposed to be some base oils moving out of Brazil, possibly to Nigeria.
Europe
Cargo demand has been steady within the North Sea, and there are only a few ships completely open and with no prospects of work. Essentially, contractual demand is taking care of the majority of ships in this area.
The Baltic fleet is mostly all busy for the next week or so, with just a few exceptions. Fortunately for the base oils traders, the ships that are available tend to be good base oil carriers, and they should not have to pay the premium freights that some of the chemicals fetch. It has been a much colder week in the Baltic but base oil ports like Liepaja and Riga have been accessible.
The market southbound into the Mediterranean is fairly active, and there is not a great deal of surplus space. The usual grades such as biodiesel, ETBE, aromatics, caustic and acrylonitrile tend to fill out what remaining space there is. Base oils have been pretty dull in comparison to recent weeks, perhaps because of concern that new import rules may be implemented next month on imports of base oils into Turkey. Northbound is dull, and there is adequate space for most requirements.
Inter-Mediterranean routes are deemed to be quieter this week. Not that there is a considerable build-up on tonnage, but more because the amount of new business quoted has been less than the previous week.
Transatlantic westbound is an interesting market. Essentially there are rates for very prompt shipment, there are rates for mid-second-half March shipment, and there are rates for end March or early April, and they all vary enormously. A cargo of 5,000 tons of easy chemicals from Rotterdam to Houston would cost around $65 to $70/t for very prompt shipment, falling to low-to-mid $50s/t for mid-second-half March, and going for under $50/t for end March shipment, and all three levels have been confirmed fixed over the course of the past week. It all depends upon necessity. The main products are benzene, pyrolysis gasoline, toluene, acetone and paraxylene, enlivened by larger lots of biodiesel, naphtha and urea ammonia nitrate.
Europe-to-Far East is much tighter on space for March loading. Demand however is not strong enough to warrant putting any additional tonnage on berth, at least from Northwest Europe. There are a couple of cargoes from the Mediterranean and Black Sea, but the base oil fraternity is not so interested in sending material to Asia or even India and the Middle East Gulf, and those enquiries that have surfaced have not been booked.
Asia
The past few days have seen much more demand quoted on the domestic Asia markets. While there are many March requirements still to be shipped, the amount of new business for April has been surprising. In terms of tonnage supply, there are still some ships that can accommodate mid-March parcels, but their number is dwindling fast. Charterers need to be more flexible on their preferred loading dates, and it is increasingly common to see laycans being widened in an attempt to snare tonnage. Bad weather is a problem that is affecting a number of Chinese ports currently, with the inevitable result of delays and therefore further tightness of vessel space.
There is a good selection of base oils among the usual aromatics and glycols, including some larger volumes from Korea heading south to Southeast Asia, and at the same time several large lots are heading back into China from Southeast Asia.
Asia export demand is robust, and some owners are quoting as much as $70/t for 5,000 ton parcels of aromatics from Korea to the U.S. Gulf. The amount of biodiesel shipped to the U.S. is increasing too, and rates of over $110/t have been confirmed for 10,000 ton cargoes from the Malacca Straits to New York.
More space should become more readily available late March and into April, but the expectation is that palm oil demand will be increasing at about this period, which could nullify the extra space. The Middle East Gulf-India region is stable without being too exciting. Rates are unchanged to Europe and perhaps down a touch on the eastbound leg.
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.