There have not been too many changes in the U.S. Gulf over the past couple of weeks. Transatlantic eastbound has increased slightly as a result of high demand from European customers for styrene and benzene following Shell Moerdijks force majeure, which could be in place for the rest of the year. BP has also had issues in Salt End with acetic acid and we have seen some interest in importing this grade to Europe, though the length of shutdown has yet to be clarified. Therefore, rates for eastbound business have lifted to mid-high $40s per metric ton for 5,000 ton parcels to Rotterdam. Base oils have not really been a spot commodity on this grade lane.

Base Oils have been detected in the U.S. Gulf to Caribbean route, however, as well as the U.S. Gulf to Brazil route. Space is freely available within the Caribbean, but contractual demand is fairly positive on the route into Brazil. There are, however, some open ships with space and it should be possible to negotiate a rate close to $60/t for 5,000 ton parcels from Houston to Santos.

U.S. Gulf-to-Far East has seen a partial recovery, but aromatics are not included and so ships are having difficulty filling out. The market is developing almost two tiers. Prompt cargoes of 5,000 tons from Houston to Mainport Far East can probably fix with numbers in the low $50s/t, but cargoes for early November, for example, could require low $60s/t. The big question is whether there will be a year-end rush, because many grades of chemicals keep falling in value and buyers simply hold back. If prices stabilize at the same time as the big inventory shift from the U.S. Gulf occurs, then rates could skyrocket, but if not, then freights could go even lower. And after all, bunker costs have fallen substantially, which will allow owners greater wiggle room to concede lower freights.

U.S. Gulf to India-Middle East Gulf is a route on which base oils are expected to move. Freights are presently around high $80s to low $90s/t for 5,000 ton parcels, and there are other products looking to ship in this direction, so it could be possible that some owners will want to insert some extra ships on this route.

Europe

It has been so quiet the past couple of weeks that owners have had difficulty maintaining any kind of schedule across the North Sea and Baltic. To begin with, the entire chemical community congregated in Vienna for the annual European Petrochemical Association convention, which meant hardly any new business materialized. Thereafter, naphtha prices dropped like a stone in the wake of crude oil, and with so many products based on naphtha, prices just floored and demand dissolved. The situation is hardly any better now, and there are many prompt open positions. Freight is such a small component that even lowering freights does not stimulate demand, and it is a question of hunkering down and waiting.

The same situation applies in the Mediterranean, too. Rates are highly notional and with some encouragement, owners can be agreeable to rate reductions from the last-done level since there are still too many ships and too few cargoes.

Transatlantic westbound is the route blessed with a fair amount of demand. Pyrolysis gasoline has been prominent, as has cumene, area ammonia nitrate, sulphuric acid, caustic, wax and even some base oils. Rates have lifted into the $45-46/t region for 6,000 ton parcels going from Rotterdam to Houston.

Europe-to-Asia is not very busy and there are hardly any larger cargoes around. That said, there have been a number of smaller items and owners have been able to book some of those and gradually fill up some of the large gaps that had opened up. Rates are down to low-mid $70s/t for 5,000 ton parcels going from Rotterdam to Mainport Far East.

Europe to India-Middle East Gulf remains reasonably active with acids, vegetable oil, some base oils, aromatics, acrylonitrile and specialty chemicals. Rates are holding in the mid $80s/t for scheduled carriers, but opportunities do exist for lower numbers should an outsider have space, especially out of the Mediterranean, and indeed there are several such vessels.

Asia

In China, Golden Week meant that very little fresh business was conducted in the domestic market. Since then, there has been a fairly steady amount of trade, especially in Northeast Asia and space has become quite scarce for the rest of October. Typhoons have also been disrupting traffic in this region, although surprisingly there have been relatively few voyages cancelled.

Southbound to Southeast Asia does produce the occasional ship with space but rates are fairly robust, and it is hard to find reductions in freights. Base oils are looking to move south from Korea and Japan principally.

Inter-Southeast Asia has seen some base oil activity, too, and freight levels are mostly stable.

Asia export trades are still experiencing high demand for products such as benzene to both Europe and the United States. Asian benzene prices hit a four year low this week and given the issues in Europe, there are expectations that this trade will continue. Methanol, biodiesel and sulphuric acid have also been seen to the Americas. Rates are volatile. It is possible that 5,000 ton parcels from Korea to Rotterdam can go for low $100s/t, but miss the sailing and the next ship will charge $115/t, or even higher.

Palm oil markets are a bit softer into India seeing that the Hindu festival Diwali will soon commence and there is little further room to take more material. Bad weather has been hitting India, too, with monsoons on the west coast and destructive typhoons on the east. Port delays can be as high as 10 days at certain installations. The Eid holidays in the Middle East Gulf region have also affected trade there, and business has been fairly slow. Firm business has been able to pick off some ships at a dollar or two under usual levels. Attempts have been made to ship 20,000 tons of base oils from Iran to Turkey, but such volumes seem almost incomprehensible, especially given the limited amounts of storage in Turkey.

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 Panos Giannoulis can be reached at fix@ssychems.com or +44 20 7977 7538 and in Singapore Jordi Maymi at +65 6854 7127.