U.S. Gulf-to-Far East is seeing the most pressure. With nothing left on any of the vessels already heading out east, there is scope for outsider vessels to come on berth, which is what we have started to see. Freights on these ships however are considerably higher than normal, with 5,000 ton parcels of basic chemicals from Houston to Mainport Far East quoted in the $110-$115/t region. It remains to be seen whether the traders and end-users will be able to accommodate such freight levels.

U.S. Gulf to India-Middle East Gulf is also tight on space, with at least 20,000 tons of base oils fixed over the past week or so. Rates are firm and well into the $90s/t, even for moderate-sized cargoes.

Transatlantic eastbound is active. Styrene, pyrolysis gasoline and ethanol are among the hot commodities while vessel space is somewhat limited until later in the month. Rates have edged up slightly, but only by a dollar or so. If demand is sustained, rates will probably continue on this stable-to-firm track, but if the arbitrages fade, then some of the outsider space may be placed on the other routes out of the U.S. Gulf, thereby easing the pressure.

U.S. Gulf-to-east coast South America is very tight on spare space through the rest of October, but with declining demand back out from Brazil and Argentina over the next month or so, owners are not automatically attracted to this trade lane and so it is likely to remain tight. Rates are steady. U.S. Gulf-to-Caribbean has encountered an increase in activity and thus a slight increase in freight levels. Small parcels of base oils have been spotted in this region, but with flexibility most should find coverage, especially for shipment during the second half of October.

Europe
The market in the North Sea and Baltic has had yet another fearsome week with low demand and correspondingly low freights. Contractual demand is slow too which places more onus on owners to find spot business.

Southbound into the Mediterranean has been fairly active, but demand has been blunted by the sheer number of ships on berth, many of which are big. Base oils have certainly been noted, and some larger cargoes were booked, but new demand is a lot less when looking further ahead into October. Northbound has been dull and there are plenty of ships remaining with space.

Inter-Mediterranean business is low and there is still an oversupply of tonnage in the region. Owners have been hoping for a pre-European Petrochemical Association conference rush, but this has yet to materialize. Transatlantic westbound remains patchy. A few parcels of caustic, benzene, sulphuric acid and urea ammonia nitrate have been worked, but space still exceeds demand, and so rates have edged downwards by a dollar or so as owners strive to look more competitive.

Europe-to-Asia is the only route that is stronger. Vessels that are already on berth for October are just about full, and space really only shows up late in the month. Owners are more bullish on their freight ideas, and rates have generally firmed. For example, 5,000 ton parcels of easy chemicals from Rotterdam to China are now looking at $95 and above. Contrary to reports that the arbitrage for base oils is closed, there have still been some enquiry to Asia, and perhaps lack of space is more the reason why not more cargoes have been fixed. Europe to India-Middle East Gulf is also a route that is attracting base oil interest. Rates are mostly flat, although numbers for vegetable oil cargoes from the Black Sea have risen well into the $60s/t.

Asia
Public holidays in Asia have caused a slowdown in trade over the past week. Consequently, there are still many vessels that are either fully open or have part-space available for October. Rates on some Domestic Asia routes have subsided by a dollar or so, particularly those routes going north from southeast Asia. For example, 1,000 ton parcels of heated base oils Singapore to South China are not far off mid $50s/t now. Rates out of Korea are stable so far, but there will have to be a lot of new business quoted over the next week or so if those rate are not to decrease.

Asia export markets rely heavily on the biodiesel and palm oil sectors. Products such as benzene have been tentatively tried to the United States but nothing much has developed. Asian base oils are supposed to look more attractive in terms of pricing, but as Asian prices fall, so too European prices are supposed to weaken, which may negate any chance of shipping base oils to Europe. For those planning to target the U.S., there should be space available later in October and rates will likely be around $75/t for 5,000 tons of base oils from Ulsan to Houston. The Middle East Gulf-India region had a quiet kind of a week. Space can be found both east and westbound, and at unchanged rate levels.

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.