SSY Base Oil Shipping Report


None of the regional markets looked particularly inspiring over the past week. Holidays hit Asia and Europe while the U.S. went into slow-motion.

U.S. Gulf
Fundamentally, the U.S. is short on August space but nothing really happened during the week to tighten the space further. Consequently, the majority of freight rates remain unchanged. Only the U.S. Gulf to Far East route recorded any gains, and that was not so much because of business done but more because owners anticipate a deluge of September business and therefore have set their sights on rates of $80 per metric ton or thereabouts for 5,000 ton parcels of easy chemicals from Houston to Mainport Far East.

Styrene was about the only cargo frequently quoted through the entire week. U.S. Gulf to the west coast of India-Middle East Gulf suffered from the end of Ramadan and the subsequent halt in demand. Several ships have space in September and owners are looking towards rates in the $87-89/t region for 5,000 ton parcels to the west coast of India.

Transatlantic eastbound had a very slow week with hardly any demand noted. There is still quite a lot of August space available and a firm cargo could severely test owners rate ideas. Around 12,000-13,000 tons of base oils are looking for space from the U.S. Gulf to Nigeria, but since there are relatively few ships fully open then rates will have to compete with routes such as U.S. Gulf to the east coast of South America that are paying in the $65-70/t range for similar cargoes of base oil.

Indeed, base oil demand is reported to be strong from South America along with caustic, thus helping preserve high levels. U.S. Gulf to Caribbean routes also had a slow week, although space is tight anyway for the rest of the month and so rates have not been tested further.

Whilst not exactly busy, the North Sea and Baltic parcel routes actually benefitted from a slight increase in demand over the past week and while this has done nothing to boost rates, it has also done nothing to cause rates to further deteriorate.

Southbound into the Mediterranean is somewhat overbooked and this has produced some exceptionally attractive freights. It may be possible to book 2,000 tons of base oils from Rotterdam to Marmara in the mid $50s/t.

Northbound from the Mediterranean is sluggish, apart from pyrolysis gasoline that is quoted from the Black Sea and Adriatic.

Inter-Mediterranean markets have not had a disastrous week, especially considering it was the end of Ramadan and countries such as Turkey play such an important role in the demand and supply of Mediterranean cargoes. For sure there are prompt ships around but the majority of the fleet has secured employment of one kind or another. Yet again, biodiesel, MTBE, ETBE and ethanol were among the top grades booked.

Transatlantic westbound has not been busy, but demand has been constant with parcels of paraxylene, sulphuric acid, urea ammonia nitrate, and biodiesel. There has also been some base oils interest into the Caribbean. Since there is not a lot of prompt space, rates have yet again fractionally increased with 5,000 ton parcels from Rotterdam to Houston fetching low-mid $40s/t.

The Europe to Asia route looks steady. August space is not plentiful and there are some parcels of base oil, paraxylene and orthoxylene around that should probably fill out any remaining tanks. Rates appear stable, as do rates on the Europe to India-Middle East Gulf route.

Yet more public holidays in Asia have exacted a toll on the domestic Asia market. Until the middle part of the week there were a number of opportunities to ship styrene, glycols, ethylene dichloride and paraxylene and base oils into China but it all went rather flat thereafter. Base oil demand surfaced on the northbound route again, with enquiries from Southeast Asia into China.

Rates are holding at the moment, but further holidays in Japan and Korea may blunt the owners ambitions to hang on to the same rates as last week.

Asia export trades have been subdued and rates into the U.S. are gradually creeping downward. Rates to Europe and India-MEG are stable for the time being.

Palm oil demand is low and since palm oil absorbs so much of the open tonnage in Asia it may be possible that rates for chemical parcels and base oils will come under downward pressure soon. Predictably, there was very little happening in the Middle East Gulf-India market due to the end of Ramadan.

Adrian Brown is senior market analyst for chemicals and base oils with SSY Shipbrokers, London. Information about SSY can be found Adrian Brown, in the U.K., can be reached atfix@ssychems.comor by phone at +44 1207-507507. In the London office SSYs Jordi Maymi can be reached atfix@ssychems.comor +44 20 7977 7560.

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