Finding vessel space in February has become an issue on a number of long-haul routes from the U.S. Gulf and Europe, and could lead to an attempt to increase freight rates. Asia was busy before the holidays and will certainly be active again afterwards.
U.S. Gulf of Mexico
The market out of the U.S. Gulf has become quite interesting. Ostensibly, nothing much has changed, outwardly at least. However, what has become apparent is that the scheduled carriers, the ships that routinely load from the U.S. Gulf, have almost all filled out for February. That means that in order to ship still within this month, an outsider has to be brought on berth. Normally, this should not be a problem, but when all the major routes are devoid of space, it means that there are more alternatives open to owners who do have a ship available in the U.S. Gulf.
They can go from the U.S. Gulf to South America, for example, and in so doing would be in a good position to take advantage of the new vegetable oil crop as it becomes available from Brazil and Argentina later in March. Another alternative would be to run after the ethanol cargoes that are quoted from the Gulf to Jebel Ali, or to hit the Transatlantic eastbound service with its cargoes of styrene. Or pursue the next lifting of 10,000 to 12,000 tons of base oil that is quoted from the U.S. Gulf to Nigeria for end February. And for slightly larger ships there are opportunities to take styrene or BTX to Asia.
Freight rates across the region remain notionally unchanged from the previous week, but there is a strong possibility that the next batch of fixtures will be done at higher rates as outsiders are snapped up. For charterers, if there is no urgency to load in February then it may be best to skip the month and fix ahead into March, since owners seem prepared to accept the original freight levels for forward booking. How long they will continue to do so remains to be seen, especially if they start to sense that more demand is beginning to appear for March shipment.
Europe
The same situation that is taking place in the U.S. is also happening on the deep-sea routes out of Europe. Transatlantic westbound for example is very short on space, and owners who are willing to step in will only do so against steep increases in freight. For this reason, we have seen some much higher rates done – 5,000 tons of aromatics from Rotterdam to the U.S. Atlantic Coast was booked at $57/t for example, and there is talk of a cargo of 5,000 tons of pyrolysis gasoline from Port Jerome to Houston being worked currently that could end up in the $70s/t. Normally, rates for 5,000 ton parcels from Rotterdam to Houston would be in the upper $40s/t.
On the Europe-to-Far East service, all the remaining scheduled space is full for February. There is a moderate amount of demand, the majority of which is for 5,000 ton parcels, whether of aromatics, acetone, butanols or phenol. Since none of these cargoes really qualifies as a base cargo, owners are looking to achieve numbers in the $120s and $130s/t for 5,000 ton cargoes from Rotterdam to China, which is a sizeable jump from the mid $90s/t that is the more usual number.
Europe-to-India and the Middle East Gulf continue to see levels in the mid-to-high $70s/t for 5,000 ton parcels from Rotterdam to the west coast of India.
European coastal routes have also been busier, but in these markets there is usually some tonnage available if there is some flexibility in the loading period. Bad weather has affected the North Sea for instance, and a number of ports were closed to traffic due to strong winds. The Baltic is tight on space with some of the regular owners now booked through until the end of the month. The clean petroleum products market is strong, and ships that switch into this market are reporting to be doing well. The Mediterranean has tightened to a degree as well.
From Terneuzen to Aveiro 4000 tons of benzene fixed at close to 100,000 when the usual rate is more like 80,000. From Temryuk to Oristano 2,000 tons of acetic acid went for $80/t when a more normal level would be $60 to $65/t. There are plenty of other examples, and it seems to have occurred because of simultaneous increased activity in the chemicals, clean petroleum products and vegetable oil markets.
Asia
Demand in the domestic Asia market remained strong right up until the eve of the Chinese New Year, with numerous requirements all seeking February tonnage. Since most of those shipments will still have to be fixed, it is likely that demand will pick up again as we progress through the week. Base oils have featured into China quite regularly, whether from Korea or Southeast Asia.
Export demand has been pretty robust. Benzene is being shipped to the U.S., and there have been enquiries for larger lots of caustic and sulphuric acid. Palm oils have been a bit quiet, which is apparently normal for this period. It is an important market, however, and has employed a vast number of ships. If it slackens, then we may find that ships begin to filter back to their more usual trades and thereby eventually ease the tightness in Europe and the U.S. That is still far ahead from now though. In the India-Middle East Gulf markets, space is tight both westbound and eastbound. Rates are perhaps a little firmer on both routes.
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.