The United States has become quite quiet, because there is very little space left able to load within October. Europe is very poor with masses of idle tonnage. In Asia, there is more prompt business and ships are gradually easing back into November.
U.S. Gulf
The theme this week to shipping out of the U.S. is simply no space left for October, almost irrespective of the route. U.S. Gulf-to-Far East is potentially the busiest of all the trade lanes, but the only way to make any business work is to pay very large freights and hope to attract some of the smaller ships that would not normally head out to Asia. For instance, there are several traders trying 10,000 cubic meters of ethanol from the U.S. Gulf to the Philippines and are willing to pay almost $100 per ton, but owners are sticking out for $120/t. There are all sorts of products theoretically looking to move in this direction, including styrene, glycols, phenol, paraxylene and ethylene dichloride but base oils is not one of them.
U.S. Gulf to India-Middle East Gulf ran out of space some time back and is now waiting for the November nominations that might put some ships on berth. Transatlantic eastbound remains firm. Requirements include styrene, ethanol and pyrolysis gasoline, the last of which has just been booked for end of October in the low $60s/t for 13,000 tons out of the Mississippi. Other potential candidates are using these rates as a benchmark for their own rate ideas.
U.S. Gulf-to-east coast South America does have some prompt space but most of the caustic and base oil requirements are for later dates. Numbers are mid $70s/t from Houston to Santos for 5,000 ton parcels for example. U.S. Gulf-to-Caribbean is pretty busy for the rest of the month, and owners are cherry-picking those cargoes that best suit their dates and scheduled ports. If the timing suits, the rates can be competitive, so 3,000 ton base oils from Houston to Vera Cruz could be fixable at around $35/t, but miss that particular ship and you could then be expected to see $40/t or more.
Europe
Demand for vessels is very poor in the North Sea and Baltic region right now, and every firm requirement is able to gather a variety of ships and almost all at very competitive freights. Base oils have been slow in the region.
Southbound into the Mediterranean has seen a good level of enquiry but everything goes very quickly since owners want to escape from Northwest Europe. Rates on this route have dropped by 3-5/t over the past month and where rates were high 20s/t or low 30s/t for 3,000 ton parcels into the Spanish Mediterranean or French Mediterranean, the levels can be closer to mid-high 20s nowadays.
Northbound is dull, apart from a bunch of pyrolysis gasoline possibilities. Inter-Mediterranean markets have slumped badly, and at this very moment there is something like a dozen idle ships in the western Mediterranean. The eastern Mediterranean has at least benefited from a new wave of vegetable oil parcels that is helping take some tonnage off the market. Transatlantic westbound is overtonnaged, and rates are under downwards pressure. Latest news is that 5,000 tons of pyrolysis gas has just been booked from Antwerp-Rotterdam-Amsterdam to U.S. Gulf at $41/t, which represents a drop of $2-$3/t over the previous week.
Europe-to-Asia is a rather complex market. There are a couple of ships that can still make October loading dates and have a reasonable amount of space remaining, but since a further 10,000 tons paraxylene was booked from Antwerp-Rotterdam-Amsterdam to the Far East at $99/t, these owners are holding out for similar levels. Traders have started looking at styrene from Europe to China too, perhaps because both styrene and paraxylene cannot find space from the U.S. Gulf this month. It remains to be seen who backs down first.
In the Europe to India-Middle East Gulf market, there are many vegetable oil cargoes to help soak up the surplus space, but in spite of this there are gaps. We have heard base oils worked for around $70/t basis for 5,000 tons from Black Sea to India-Middle East Gulf.
Asia
Yet more public holidays have bitten into the working week in Asia. In spite of this, however, a number of prompt requirements have found their way onto the domestic Asia market, and a growing number of ships are only showing open in November. Base oils are rather common at the moment with movements both north and southbound being seen. Freights are unlikely to stiffen this week, but if the demand continues through next week then it is possible that owners will begin looking for higher levels.
Asia Export markets are being governed by how much palm oil and biodiesel are being circulated for October and November, and since demand is increasing so too are freight levels looking a little firmer. So far, there is sufficient space around for part-cargoes, and the levels to Europe and the U.S. are either unchanged or very slightly higher this week, but if demand remains robust then freights will continue to nudge upwards.
The Middle East Gulf-India region has been fairly busy too and space is looking a little tighter, in spite of an influx of ships bringing in palm oils from Asia and sunflower and soybean oils from the Black Sea. The start of religious holidays in the region may however cause a slowdown, although it is not apparent so far.
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.