The U.S. market has cooled over the past week while Asian demand has continued upwards. Europe is patchy, with some routes looking brighter and others dropping off.
U.S. Gulf
The transatlantic eastbound market is less active this week. Styrene has become almost invisible and ethanol is mostly tentative. Consequently, some prompt space has opened up on the route and this has caused rate discounting to the tune of a couple of dollars for parcels up to about 5,000 tons. Equally, larger lots remain difficult to fix. For example, 10,000 tons of technical corn oil for biodiesel usage from the U.S. Gulf to Finland needed an outsider to come on berth.
U.S. Gulf to the Mediterranean is busy with some base oils quoted, as well as some caustic, ethylene dichloride, vegetable oil, tallow and styrene which are causing freights to rise. The way things are shaping up, freight costs for 5,000 tons of base oils from U.S. Gulf to Turkey are not far from $100 per metric ton.
U.S. Gulf to Asia is blowing hot and cold. Most traders are putting their efforts into fixing December cargoes which leaves a gaggle of November ships with a few open tanks. There could be some room to negotiate off freights that are currently mid-high $90s/t for 5,000 ton parcels from U.S. Gulf to China, but realistically there is not that much open space around and the expectation for this route is that it will remain firm through year-end.
Space on the U.S. Gulf to India-Middle East Gulf route is almost fully contracted out until the second half of December. Spot freights are therefore a bit firmer, subject to there being a vessel on berth. Cargo of 10-12,000 tons of ethylene dichloride is quoted from U.S. Gulf to India which might spur an outsider to come on berth and then maybe there could be some space for some smaller lots of base oil.
The scheduled ships from U.S. Gulf to the east coast of South America are all just about tanked out for the rest of November which means there will be few opportunities to fix base oils into Brazil or Argentina until next month.
U.S. Gulf to Caribbean is all fairly busy. Vegetable oil and tallow take center stage with at least 35,000 tons fixed on just a couple of ships, with yet further cargoes lined up. Space can still be found but owners ideas are bullish in general.
Europe
Freights were higher last week for many of the routine cargoes that get shipped around in the North Sea and Baltic, including base oils. Bad weather has certainly played a part, but strong demand was probably the root cause. Going forward, demand seems to have come off slightly and so we may go back to more normal freight levels.
Owners report ships that were loading first half of November to be mostly full on the southbound service into the Mediterranean. Seemingly they were faced with numerous cargoes. The ships lined up for late November still have space, so far.
Northbound volumes have been steady.
Inter-Mediterranean markets have stood down a bit, compared to the previous week. Many of the ships that had managed to build a forwards program so that they were covered well into second half of November have not really changed position, suggesting that demand is not stretching out that far. Instead prompt vessels have enjoyed a good spell of activity within the Mediterranean. Base oil demand is a bit slow, however, with just a couple of cargoes noted fixed into Turkey.
Transatlantic westbound has moved on from the time when there was a massive overhang of tonnage on berth and owners are starting to go back to more usual freight levels. A small arbitrage opened for benzene late last week but overall spot volumes are not that healthy to sustain much of a freight increase and numbers could possibly remain unchanged.
Space on the Europe to Far East route has tightened, however, and none of the remaining scheduled carriers are able to offer even 5,000 tons of space. Rates are therefore starting to creep back up but will need more demand if they are to remain firm. Base oils have been checked from the Black Sea to Asia along with some smaller lots from the Mediterranean but none have materialized so far.
Europe to India-Middle East Gulf is also a little firmer due to less space being available on the regular carriers. Phosphoric acid and vegetable oil are the big movers, with these two products alone accounting for close to 400,000 tons of space in November. Some interest has been shown in base oils, mostly out of the Mediterranean. Owners are looking for around $80/t for 5,000 ton parcels from Antwerp-Rotterdam-Amsterdam to the west coast of India, although no base oil fixtures have been noted at these figures.
Asia
It has been reasonably active again on the domestic Asia market. Traders are beginning to shift their attention to December loading but there would seem to be just about enough cargoes left in November to cover the remaining ships that have space this month. Overall, rates are very slightly firmer, but perhaps not by more than a dollar or two.
Base oils freights are mimicking those of the easy chemicals market, particularly from Korea into China with 3,000 ton parcels from Ulsan to mid-China costing $24-26/t. Base oils movements this month from Korea to China are reportedly much higher than the previous month and with the colder weather gradually spreading into Northeast Asia, the fleet of simple, less sophisticated ships will soon all be employed in the heating oil sector.
As the amount of tonnage available in Asia has thinned out the palm oil market has also experienced a minor upswing in rates, especially into India. Rates have not really altered on the Asia export markets, however, with 2,000-3,000 ton parcels from Korea to Antwerp-Rotterdam-Amsterdam still fetching around $125-130/t.
The India to Middle East Gulf region is fairly busy and the volume of business is just about adequate to support the large number of ships passing through the region each month. Space is looking balanced westbound with a wide spread of cargoes noted. Only a small amount of base oils have been enquiring from Middle East Gulf to Mediterranean, though. Eastbound space can be found, but no more than normal. The amount of demand is fairly positive too and rates seem to be holding.
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.
