SSY Base Oil Shipping Report


The U.S. Gulf is a bit busier compared to recent weeks. European demand is at about the same pace, while the Asia market is rather subdued.

U.S. Gulf
There has been a gentle increase in the amount of business being discussed out of the U.S. Gulf over the past week. It goes hand-in-hand with a depletion of the amount of prompt space open in the area. This could change as we enter July, as we already see four or five ships coming into the U.S. Gulf in the first half of July that have yet to figure out which direction to take.

U.S. Gulf to Far East seems one of the more promising routes. There are bits and pieces of prompt space remaining on scheduled ships, but none of them can provide more than 2,000-3,000 tons of space each. Recent fixtures would suggest that levels are in the mid-high $70s/t for anything from 5,000-15,000 tons of easy chemicals from Houston to China.

All the same, we are aware of deals that have been done for 5,000 ton parcels in the very high $60s/t on vessels that are on berth at around the same time, which also suggests a lack of logic. However, the amount of demand still to be covered would suggest scheduled July carriers will likely fix quickly, and then the market will be at the mercy of the outsiders and however much they think they can get away with.

Several cargoes of base oils are listed among the petrochemicals, with cargoes noted to Korea and Singapore. Freights for 3,000 ton parcels of base oils from Houston to mainport China will likely be around $120/t, if heating is needed.

U.S. Gulf to India-Middle East Gulf is another route that seems to have a bit of strength right now. Again, there are some ships already on berth that require a small top-up in order to fill, but there has been sufficient room to allow additional ships on berth for cargoes of vegetable oil, aniline and acrylonitrile.

Transatlantic eastbound is all about styrene presently. Not all the requirements will get fixed and so rates remain roughly unchanged. U.S. Gulf to the east coast of South America is another active route, with steady streams of styrene, paraxylene, base oils and clean petroleum. Part-cargo space availability remains tight until mid-July, but since the northbound market out of Brazil has picked up with improved volumes of ethanol, there is a possibility that more owners will be keen to go on berth. No-heat base oils from Houston to Santos in the amount of 5,000 tons would cost around $75/t presently.

Coastal business is reasonably solid within Europe. In the North Sea and Baltic, there is no more than the usual number of ships that are running close to becoming open in prompt positions, thanks to a good level of core contractual business.

Southbound into the Mediterranean is mostly steady and the same kinds of freight apply to todays fixtures as to those being done last month, give or take the odd dollar.

Northbound is nothing spectacular. Scheduled ships are mostly full, but there is not a great deal happening to induce pure Mediterranean ships to take the plunge and go to the continent.

Apart from in-house or term business, there is not much happening on base oils into or out of the Mediterranean.

Intra-Mediterranean business is different, however. There is clearly a shortage of vessels open in the West Mediterranean while at the same time there is good demand, and therefore freight levels can be quite firm. Finding ships with the correct approvals to do base oils can be an arduous task. Even in the East Mediterranean, it is not that simple, as there is a fair amount of demand for small clean petroleum cargoes.

Transatlantic westbound rates are slightly softer this week, and there are still ships on berth for end of June and the first half of July that still have open space. Parcels of 3,000 tons of easy chemicals from Rotterdam to Houston are barely into the $50s/t, and base oil would not command a significant premium.

Europe to Far East gives the impression of quietness, perhaps because there are not many sizeable chunks out there needing to be shipped. All the same, ships are filling fairly well, and the small parcels of chemicals, such as nonene, butanol, paraffins and acetone pay sufficiently high freights that owners are not so anxious.

For example, a 4,000 ton cargo of acetone from Rotterdam to China paid low $100s/t.

Europe to India-Middle East Gulf is considered to be fairly strong too, with good levels of demand. A cargo of 7,000 tons of aromatics from Leixes, Portugal, to the west coast of India paid well into the $70s/t, as an example, and owners cite numbers in the $90s/t for 4,000-5,000 ton parcels of base oil from Europe to west coast of India.

The past two weeks has seen the domestic Asia market struggle to absorb the amount of open tonnage that has been quoted throughout the second half of June. Somehow, owners have managed to claw themselves back into the fray, and going into July, the supply of tonnage is looking more balanced.

However, it could take just a few days of inactivity to reverse the situation, and right now, there is not that much that is being quoted for early July shipment, in which case gaps could open up quite quickly.

Base oil rates still command a premium over petrochemicals however. Parcels of 3,000 tons of base oil Singapore to Tianjin, China, for example could expect to see levels in the mid $50s/t basis no-heat, and high $50s/t if high heat is needed.

Base oil demand is heavily focused on China, but equally there are cargoes intra-Southeast Asia and some material is making its way into India-Middle East Gulf.

Asia export demand is fairly robust, and aromatics, biodiesel and sulphuric acid have all been noted. What have subsided slightly are the palm oil freights, especially the really large cargoes into the Mediterranean and Northwest Europe. Indian palm oil demand is steady, but unexciting too.

The India-Middle East Gulf region is not as bad as some observers make out.

Westbound is certainly well-balanced. A couple of ships do have prompt space, but they have either been cancelled on existing fixtures or do not hold the correct approvals to take some of the cargoes on offer, such as styrene, glycols, methanol and ethyl acetate.

Base oils are not really in contention on this leg at the moment.

Eastbound is a bit flat, and there are a number of ships bound for India with palm oil that are hoping to capitalize on any base oils heading east. There are some base oils coming out of ports such as Karachi, Pakistan; Sitra, Bahrain; and Hamriyah,United Arab Emirates, but volumes are small and favor part-cargo space.

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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