The active market to Asia is fast depleting the U.S. of open tonnage. Europe is also offloading a lot of surplus vessels into India and Asia. Asia is active on domestic routes but much less so on long-haul routes.
U.S. Gulf
As this column predicted, the U.S. Gulf to Asia route reignited after the Thanksgiving holiday as buyers came out in force with multiple enquiries. Base oils were represented with 14,000 tons being fixed from the U.S. Gulf to Singapore for $98 per metric ton. Other requirements included paraxylene, mixed xylenes, styrene, ethylene dichloride, acrylonitrile, phenol, glycol and ethanol, the rates for which have all tended to centralized in a band from the low-to-mid $90s to $105/t, irrespective of whether the cargo size is 15,000 tons or just 5,000 tons. Indeed, there are a couple of ships still left in December with 2,000 — 3,000 tons of space and which will probably settle for $115-120/t, proving that the biggest sizes are not always the best value.
U.S. Gulf to India-Middle East Gulf is another route that is fairly busy with requirements for ethylene dichloride, solvents and base oils. There is a small amount of space remaining for December but anything larger than 2,000 – 3,000 tons will require an extra ship to commit to going on berth, and that hinges on whether some of the other cargoes such as ethylene dichloride actually firm up.
U.S. Gulf to the east coast of South America is tight on available space for the rest of December, but there are some larger cargoes around, including ethanol, caustic and aromatics that could provide the stimulus for an owner to pull a ship away from a poorly-performing route such as transatlantic and instead reposition the ship into South America. A 10,000 ton base oil cargo has been fixed in such a manner, and that ship is now exploring combination opportunities.
The U.S. Gulf to Caribbean trade is vigorous and ships have plenty to do. From time to time, space for small parcels of 1,000 — 2,000 tons does become available and can be booked at fairly reasonable freight levels. For example, a 3,000 ton parcel of base oils from Houston to the western end of the Caribbean would currently fetch mid-to-high $50s/t.
The only route out of the U.S. Gulf that does not seem to be having a busy period is the transatlantic run. The main products such as styrene and ethanol have dried up, leaving just small parcels to be fixed. Rates are falling quickly, and 1,500 tons vinyl acetate monomer from Houston to Antwerp was heard fixed in the mid $60s/t, for example.
U.S. Gulf to Mediterranean, however, is tight on space and owners are now asking for rates in the $90s/t for 5,000 ton parcels from Houston to Turkey instead of the mid $80s/t that has been customary for the past month or two.
Europe
The local market in the North Sea and Baltic performed a little better over the past week and a greater number of vessels have edged forward into the Christmas period. So far, the majority of fixtures are being done at unchanged levels but owners may try to raise freights a little if demand continues at present levels.
Southbound into the Mediterranean is active and freight rates are stable-to-firm. Base oils have been noted, in spite of the new restrictions into Turkey, but it is unclear if any such cargoes have been booked.
Northbound is also considered stable-to-firm, and some regular chemical parcels have been fixed between 3 and 5/t more than earlier shipments.
Inter-Mediterranean markets have flourished with heightened demand recorded in all disciplines, including chemicals, acids, vegetable oil and clean petroleum. Consequently, there is not always a wide choice of tonnage available for every requirement and base oil charterers have to compete against other, higher-paying commodities. Vegetable oil in the amount of 5,000 tons from Black Sea to southern Spain, for example, is going for low-mid $50s/t, which sets a benchmark for other cargoes of a similar size.
The ice campaign is due to start in a number of Black Sea ports from 15 December due to the formation of ice already. Most base oil ports are unaffected at this stage.
Transatlantic westbound is in a bit better shape this week having an influx of pyrolysis gasoline, sulphuric acid, MTBE, urea ammonia nitrate and biodiesel cargoes. Rates for 5,000 ton parcels from Antwerp-Rotterdam-Amsterdam to Houston have been going in the low-mid $40s/t typically.
The route from Europe to Asia has been very busy, especially with parcels of aromatics, but –somewhat surprisingly — there has also been interest in shipping base oils. Rates are mostly firm due to a shortage of December space which is boosting levels for 5,000 ton parcels from Antwerp-Rotterdam-Amsterdam to China into the high $90s/t.
Europe to India-Middle East Gulf is also firm. Vegetable oils from the Black Sea have accounted for a staggering amount of space and along with phosphoric acid have helped deplete the European market of much of its surplus tonnage. Base oils have been showing up on this leg, and rates for 5,000 ton parcels from Rotterdam to Mumbai are pegged at around $80/t. From the Black Sea, rates for similar quantities of vegetable oil into the Middle East Gulf are mid $60s to mid $70s/t depending upon discharge port and are therefore more attractive to ship owners when compared to base oils that seem unable to pay such levels.
Asia
The past week or so has seen a substantial amount of demand placed on the domestic Asia market, with the majority of cargoes being quoted for December lifting. As a result, vessel space has tightened further, and although it is still relatively easy to secure space for December loading there are nonetheless a large amount of requirements still left to be covered. If this week continues in the same vein then it will not be too long until supply/demand of vessel space becomes balanced. Rates are marginally firmer but are not expected to escalate much more because demand may be held in check until the start of January when the rush to ship prior to the Lunar Holiday begins in earnest.
Asia export figures have been down slightly. Benzene does not feature until January and instead the main product has been biodiesel. Even palm oil shipments have reduced. Rates are roughly unchanged but there is a weaker undertone.
The Middle East Gulf to India region is fairly healthy.
Westbound numbers have inched up by a dollar or so. Methanol has been in good demand due to local shortages in Europe, but news that Oman has declared force majeure on methanol shipments may curtail further shipments. All the same, a string of enquiries have been seen, including cargoes of benzene, caustic, vinyl acetate monomer, acetic acid, ethyl acetate, linear alkyl benzene, ethanol, cyclohexane and butanediol.
Eastbound has also been seeing a lot of requirements in the MTBE and methanol line as well as plenty of aromatics. A large proportion of these cargoes have been quoted repeatedly for well over a week without finding the right kind of cover or freight level that is agreeable to charterers.
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.
