Arbitrages have been open for paraxylene, styrene, glycols, ethylene dichloride and ethanol, although demand for base oils has been muted. Moreover, because space is scarce, those vessels that are in position have been able to push up freights, but this also has an impact on the delivery costs for the next lot of shipments. Currently, 5,000 ton parcels have been booked anywhere from mid $80s up to $105/t, depending upon the individual circumstances at the time.

Now traders are beginning to sit back to watch developments on the space situation, especially as more vessels will be making their way into the U.S. Gulf towards the later part of November. U.S. Gulf to India-Middle East Gulf is strong and there is very little by way of open space. Even the bigger cargoes of base oil have been fetching over $80/t. Transatlantic eastbound also sees styrene and ethanol tentatively enquiring, but rates have risen by some $5/t since the last report and will all be in the $60s/t for 5,000 ton lots, even from humble Houston.

Contractual demand is ramping up on the U.S. Gulf-to-east coast South America service, leaving hardly any space for spot market parcels until very end November. Ethanol is starting to appear on this route and could possibly act as an attractor to bring additional tonnage on berth that could eventually bring some completion space to the route. Base oils are scheduled to ship to Brazil in November, but rates are unlikely to be lower than $75/t.

U.S. Gulf-to-Caribbean is another busy area where space is also tight. There are also many vegetable oil and tallow parcels that are still looking to find prompt vessels, which is helping drive up freights. Parcels of 2,000 to 3,000 tons from U.S. Gulf to the Dominican Republic can easily fetch $60/t or more.

Europe
The end of the month has done its usual thing in the North Sea and Baltic by producing a rush of what tend to be the routine requirements for the region – ethanol, biodiesel, benzene, ETBE, mixed xylenes, gasoline components and several cargoes of base oil. Rates remain soft but have not dipped further.

Southbound into the Mediterranean has been adequate over the past week or so, but the amount of tonnage that will need to fill in the first half of November is a bit daunting and some freight discounting may be required, unless volumes suddenly jump over the course of the next week. Base oils on the route have mainly been in-house requirements with no new fixtures reported into Turkey. Northbound can briefly be described as dull. Inter-Mediterranean, however, has seen a bit more trade, and many of the open positions have dropped back further into November.

Some base oils have been noted in the east Mediterranean, but the bulk of business has consisted of routine shipments of biodiesel, caustic, acid, MTBE and methanol. Transatlantic has not been a complete write off, with a number of fixtures made – such as benzene, paraxylene, urea ammonia nitrate and acetic acid – but the amount of open tonnage that happened to be in port at exactly the same time swamped demand and owners had to let freights drop further.

Currently, 5,000 tons of aromatics from Antwerp-Rotterdam-Amsterdam to U.S. Gulf are known to have gone at $39/t, although owners are also claiming deals in the low $40s/t. Not much is happening on base oils on this route, apart from waiting to see whether the tender to Venezuela is sourced from Europe or the U.S. Gulf.

A small amount of prompt space remains on the Antwerp-Rotterdam-Amsterdam to Far East route, spread amongst several positions, of which one may be able to entertain a 5,000 ton parcel. The rest of the ships only have small amounts of space and so rates are not going anywhere unless someone has a bigger cargo to fill out the last big bit of space, in which case they could see low $80s/t. Europe to India-Middle East Gulf looks balanced. Demand is focused chiefly on phosphoric acid and vegetable oils, although there have been some attempts to ship base oils from the Mediterranean or Black Sea.

Asia
The past week or so has seen a distinct improvement in domestic Asia trades and many more ships have made it through into the second half of November. We have even seen a few rare December positions pop up, yet in spite of this there are still a fair number of ships open within a week to 10 days, and it is these vessels that are holding back freights from any kind of increase. Contractual demand has clearly accounted for a large percentage of the tonnage, but we have also seen a bit more spot activity into China as well as colder weather creating a bit more heating oil demand. Typhoons in the region have played a role too by causing significant delays.

Base oils have actually been quite busy, especially out of Korea, although many of the requirements have been below 3,000 tons. A number of movements have also been reported taking place into India and the Middle East Gulf. Asia export markets have been steady with the usual types of cargoes quoted, although aromatics have been silent.

Palm oil is described as being more active, but oddly freight levels are said to have dropped fractionally. The reason given is that there is supposed to be a build-up of tonnage in Malaysia and Indonesia over the next two to three weeks. A steady flow of cargoes have been reported westbound from Middle East Gulf-to-India, which is keeping rates firm. Currently, 2,000 ton parcels of chemicals from the Middle East Gulf to Turkey have been paying in the $120s/t, although if it combines with existing business, there is no reason to think that sub $100/t could be achievable on the right position. Eastbound has also seen a regular flow of MTBE, methanol, glycols, styrene, aromatics and ethanol, and rates are stable.

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.