U.S. Gulf to Far East is looking tight for September due to heavy contractual nominations which has seen freight rates for 5,000 tons of easy chemicals from Houston to Mainport Far East being pushed up to around $83-84/t.

Some base oils have reportedly been booked from the U.S. Gulf to Asia for levels over $100/t, even for large quantities. There is a possibility that should freights continue to increase then outsider tonnage may be drawn on berth if the right base cargo appears.

U.S. Gulf to the west coast of India-Middle East Gulf is also showing a limited amount of ship space for September and consequently one outsider is reported to have gone on berth against 8,000-10,000 tons of base oils into Mumbai, hoping to fill up with small parcels of chemicals and lubes. Owners freight expectations have moved up and the current market is around $90/t or thereabouts.

Transatlantic eastbound is experiencing a period of very soft spot demand but contracts are seeing heavy nominations. Vessel space appears to be wide for second half of September so freights could go down if owners start feeling the pressure. Towards the end of last week more cargoes of pyrolysis gasoline and styrene monomer were quoted but it has yet to be seen if they will gather any momentum.

U.S. Gulf to Mediterranean shows the usual carriers to be tight on space but some prompt interest could tempt an owner to place a ship on berth and start parceling up.

U.S. Gulf to the east coast of South America continues to draw some specific attention for base oils together with caustic soda and clean petroleum. Freights are firm around $70/t for 5,000 tons of base oils from U.S. Gulf to Santos.

U.S. Gulf to Caribbean has been quiet with just a few clean petroleum, vegetable oil and tallow inquiries. Contract nominations are healthy, allowing the ships in the area to be decently employed against soft spot demand.

Europe
The North Sea and Baltic has reverted to dullness after a previous good week. The usual owners are not so concerned because they have good coverage coming from last week, but any prompt cargo is fiercely contested with some enquiries reported to have up to five ships offering on the business.

Southbound into the Mediterranean was overbooked for a while but now the supply of ships is back to normal levels. Therefore levels for 2,000 tons of base oils from Rotterdam to Gebze should slowly be going back to around high $60s/t – low $70s/t.

Northbound lacks any excitement in the spot business with several ships showing open part cargo space.

The Inter-Mediterranean market is showing signs of recovery towards the end of the summer holidays. Spot cargoes are more active and owners generally have their fleets employed with fewer than usual prompt ships. The most common enquiries have been for MTBE, ETBE, caustic soda, acid and urea ammonia nitrate, whereas base oils have been more subdued.
Transatlantic westbound has been quiet with freights being pushed back down to low-mid $40s/t for 5,000 ton parcels from Rotterdam to Houston.

The route from Europe to Africa has seen several traders going into the market with enquiries for base oil for delivery into Ghana following a tender. There have also been questions about cargoes into East Africa.

Europe to Far East is still showing available shipping space for end August and September. Cargoes of base oils, paraxylene, mixed xylenes, orthoxylene, and vegetable oils have been circulated in the market, but it appears that traders cannot firm up the spot business. Although reports suggest a possible arbitrage for base oils in this direction, there has not been an overwhelming demand of cargoes into the market.

Owners are looking for levels in the low $90s/t for 5,000 ton parcels from Rotterdam to Mainport Far East but a firm requirement could see something closer to mid $80s/t.

Europe to India-Middle East Gulf remains stable at around mid $70s/t for 5,000 ton parcels from Rotterdam to Mumbai. Phosphoric acid continues to flow regularly to India in big lots whereas interest in vegetable oils from the Black Sea has dropped back to second half of September. Chemical and base oil traders have tried cargoes into India but little has firmed up due to wide concerns about the strength of the rupee and the diminishing arbitrage opportunity for imports.

Asia
The Intra-southeast Asia market is stable and freight rates continue at similar levels. Owners have started booking spot cargoes for first half of September now that their contract nominations have been confirmed.

Northbound has seen a reduction in shipping demand with lower volumes of chemicals such as phenol and acetone, but freights do not seem to be affected for the time being due to decent contract nominations.

There have been several enquiries in the market for 3,000 ton parcels of base oils from Indonesia and Thailand to mid-China. Freights rates for 3,000 ton parcels from Singapore to mid-China should fetch high $40s/t.

Asia export demand is rather flat and there are several ships open with space back to Europe and the U.S. which might depress freight levels.

Palm oil is rather bearish due to fewer than usual imports into India because of the issue with exchange rates. Beyond the palm oil market, this whole currency situation in India is also affecting chemicals and other cargoes, to the extent that Indian producers may be forced by the government to stop exporting and to sell their products into the domestic Indian market. Should this occur, then shipping both into and out of the region may be affected with the result that owners may have to find alternative employment for their ships which could potentially impact freight rates for other trade lanes.

The Middle East Gulf-India region is not very active but the freights remain balanced due to the visible lack of new tonnage coming into the region with palm oil, base oils or chemicals.

Adrian Brown is senior market analyst for chemicals and base oils with SSY Shipbrokers, London. Information about SSY can be found atwww.ssyonline.com. 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.