The U.S. has come back on track, especially on the routes into Asia. European demand continues to nudge upwards and Asia, aside from a flat spot on palm oil, looks to be heading towards a busy end of year.
U.S. Gulf
U.S. Gulf to Far East is where the action is these days. November space is almost tanked out. As owners finalize last bits of contract nominations and compute how much space is left, there is a possibility that around 15,000 metric tons of additional space could open up, but a decent-sized cargo of aromatics could swallow it up all in one go. And there are a number of such cargoes quoted around. A 12,000 ton cargo of monoethylene glycol from the U.S. Gulf to two ports in China was heard to have fixed in the low $90s per ton. Equally, a couple of 5,000 ton parcels were also booked in the low $90s/t which shows that sometimes bigger is not always better, but that instead, the right timing and the right ports or even berths matter more forobtaining the best freight rate.
No further base oils have materialized, with demand centred on aromatics, ethylene dichloride, phenol, acetone, acrylonitrile, ethanol, biodiesel and styrene.
U.S. Gulf to India-Middle East Gulf is also bereft of any new base oils fixtures. Traders are believed to be looking at doing another large shipment of base oils to India but it has yet to finalize.
U.S. Gulf to the east coast of South America is also busy and there is no scheduled space until December. Caustic and glycols seem to be the main spot requirements. Rates are stable so far.
U.S. Gulf to Caribbean is also busier and prompt space remains scarce.
Transatlantic eastbound, on the other hand, has slowed dramatically and there is quite a lot of space available, even on scheduled tonnage. Rates have come down quickly. There are reports of 5,000 ton parcels of styrene fetching $50-52/t which is a drop of $5-6/t. The only other product mentioned around is ethanol. There are, however, better possibilities to fill U.S. Gulf to Mediterranean routes and we may see some of the ships going via the Mediterranean on the way back.
Europe
After just a brief lull, the pace of fixing picked up in the North Sea and Baltic and many vessels have managed to fix forward by at least a week, with a substantial number only able to offer December space. Rates have rebounded slightly and a typical cargo of 3,000 tons out of Rotterdam to any main port within 24 hours sailing time costs around 50,000 as a general rule of thumb.
Southbound into the Mediterranean has seen renewed activity, even for loading later in November and there are cargoes of caustic, methanol, FAME, aromatics, acrylonitrile, ethylene dichloride, pyrolysis gasoline, urea ammonia nitrate, and vegetable oil, and also a couple of base oil requirements. Numbers are firm, with some owners quoting high 30s and low 40s/t for 3,000 ton parcels from Antwerp-Rotterdam-Amsterdam to the Spanish Mediterranean. A more normal level would be low 30s/t.
Northbound has continued to enjoy a share of new business as well with cargoes of methanol, aromatics, acids, ethanol, caustic, FAME and pyrolysis gasoline, but no base oils.
Inter-Mediterranean markets have been affected by bad weather and ensuing delays, while demand has been fairly strong with a range of products noted in the chemicals, clean petroleum, and vegetable oil areas. Base oil trades have, however, been absent.
Transatlantic westbound volumes are lower than expected for the time of year. Toluene is one of the few cargoes for which there has been an arbitrage, although later in December sees several traders trying their luck with benzene, pyrolysis gasoline and paraxylene. The imbalance of space has lifted and rates look more stable. The recent tender for Venezuela has been booked to load from Antwerp-Rotterdam-Amsterdam, though only 11,000 tons. There was talk of ullage issues in Punta Cardon which may see the balance volume shipped later.
Europe to Far East is busier and space has tightened considerably. Its not that there is a massive amount of enquiry, as there is with U.S. Gulf to Far East, but nor too are there as many ships. Rates are responding to the tighter space situation and 5,000 ton parcels from Rotterdam to Mainport Far East are back into levels of low $90s/t.
Europe/India-Middle East Gulf is tighter as well, with stronger demand for parcels in the 3000 ton — 8,000 ton size, and rates are firm. Several base oil cargoes have been quoted to both Middle East Gulf and India.
Asia
It has been another week of steady demand in the domestic Asia markets and whilst most requirements have been for December shipment, there has nevertheless been quite a few that have required November loading. China is the main destination for a large proportion of the requirements. Products include styrene, benzene/toluene/xylene, paraxylene, glycols, phenol, and ethylene dichloride, as well as base oils. Base oils again feature quite strongly from Korea and there have been other shipments from Southeast Asia and Taiwan. Rates are expected to strengthen as the amount of space is depleted.
Asia Export markets have been rather flat, however, and rates have begun to edge downwards. Parcels of 5,000 tons of base oils from Korea to Antwerp-Rotterdam-Amsterdam would command a few dollars less nowadays, perhaps $100/t. Part of the reason is that palm oil markets are subsiding. Palm oil prices are high, while reserves or stocks of material are low. Consequently, cheaper soft oils from the Black Sea and South America are taking a greater market share. With many extra ships being fixed from the U.S. Gulf in particular to Asia, there could be a glut of tonnage coming that may see much more competitive freights for business back out from Asia afterwards.
The Middle East Gulf to India region is not that busy.
Westbound routes to Europe are holding, with freights for 3,000 ton — 4,000 ton parcels to Turkey and Rotterdam going for $115/t or thereabouts.
Eastbound, however, has faltered. There are not so many larger requirements on the market this week. Moreover, berthing delays in India have distorted the whole regional market. It is common to see a ship lose 10-12 days from the moment the vessel is fixed to when it loads the cargo. This means charterers are constantly looking at finding earlier tonnage to the vessel originally fixed, while owners are swapping ships and re-rotating others in an effort to retain the cargoes. It is a very messy situation and therefore hard to determine whether there is open space or not and whether that space is going to command a premium or whether it will be discounted.
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.
