U.S. markets remain the most buoyant of all the global markets. Asia has picked up very slightly, whereas the European market, in particular the coastal market, is languishing this week.
On the whole, the U.S. market is reasonably active and certainly not lacklustre as some observers contend. The Gulf-to-Caribbean service has seen more activity than previously, and some cargoes have certainly produced higher freights. Contractual nominations are active too, and there is little room remaining for spot business.
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The routes southbound into South America can be considered stable rather than booming, and rates show no change to the week before. With a stronger clean petroleum products market in the Caribbean and the vegetable oil crushing season coming to an end in South America, there is not so much interest in sending ships in this direction.
Transatlantic eastbound is another steady trade lane. Styrene has been the major event for the last couple of weeks, but apart from ethanol there has not been a lot else and so freight numbers have not altered.
U.S. Gulf-to-Far East sees growing pressure on space from contractual nominations as we move into October, and although there are theoretically ships open, the owners are reluctant to offer on spot business this far out until they have better awareness of what they will be expected to carry under contractual arrangements. Consequently, any outsider tonnage has been able to easily slip on berth, with at least two extra ships confirmed and one pending. Rates are inevitably strong – 10,000 to 12,000 tons of paraxylene fixed from Houston to China in the mid-to-high $80s per ton, for example.
Ethanol has been more common too, and owners are quoting levels of mid $90s/t, basis 10,000 cubic meters, for cargoes from Houston to Philippines.
U.S. Gulf-to-India and Middle East Gulf is almost full on the scheduled carriers, yet there are cargoes still uncovered and seeking tonnage. If there are any remaining uncommitted ships open in the U.S. Gulf, they may want to take a look in this direction as there is a strong likelihood of seeing higher numbers.
Things are a bit bleak on the spot side of things in the North Sea and Baltic, although contractual volumes are faring reasonably well. Owners are also grateful for their contractual obligations on the southbound route into the Mediterranean. Ethylene dichloride, caustic, aromatics, biodiesel and styrene have been the main spot fillers. Base oil activity into the Mediterranean has been less pronounced recently.
Northbound remains dull with relatively few spot requirements noted. A few more cargo possibilities have arisen within the Med, but rates are generally flat. A shortage of base oil and subsequent higher prices have deterred any real trading opportunities within the Med, with just a few possible Black Sea requirements noted, for which there ought to be sufficient space available.
Transatlantic westbound has not been so active, but prompt space has been something of a rarity. Owners had been hoping to capitalise on this but only the odd cargo of benzene/toluene/xylene or caustic could be assembled in time, and ultimately the rates reported ended the same as before.
On the run to the Far East, September space has all but gone from Northwest Europe, but there are still a couple of potential cargoes of aromatics around that may see an outsider come on berth against a higher freight level. Base oils too are talked into Asia, but mostly out of the Med where there are a couple of ships that have to go out in that direction.
It is the same on the Europe-to-India and Middle East Gulf route. Space is thin from Northwest Europe, but there is a selection of vessels able to offer on certain Med loading ports, so long as oil company approvals are not a major obstacle. Base oils have been encountered in this direction, but the charterers have not been ready to make a move so far.
A little more business has cropped up on the domestic Asia market, although a large proportion of it is for October shipment which does not help those owners who still have prompt ships open, and there are indeed still plenty of ships around on this basis. Rates have not moved much at all within Asia which suggests that the market is well balanced.
Base oil activity is not abundant and many of the shipping enquiries are simply different traders zeroing in on the same bit of business, but making it appear that there is more demand than perhaps there really is. Interest in shipping palm oil has increased however and this may have the effect of drawing off some of the open space from base oils and chems.
Asia export markets have over the past month enjoyed a plentiful supply of open tonnage that has eroded freight rates, with some charterers claiming numbers to be around 10 percent lower in September than they were in July. If the palm oil market does step up a gear, those levels may begin to edge up again.
The India-Middle East Gulf region has been a bit busier with cargoes of methanol, MTBE, styrene and aromatics, but rates are not likely to surge since there should be a greater flow of vessels inbound into the region with palm oil over the next couple of weeks.
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 email@example.com or by phone at +44 1207-507507. In the London office SSYs Jordi Maymi can be reached at firstname.lastname@example.org or +44 20 7977 7560.