U.S. markets have been rather subdued. The U.S. Gulf to Caribbean route, for instance, is seeing more February tonnage open in the region, which, after another week like this will probably start to reduce freight levels in order to stimulate trade.

We see the same on the U.S. Gulf to Far East route. Freights are largely notional for the time being, but a couple of ships do have completion space later in the month and there is a chance that they will discount off the current levels of $100 per metric ton for 5,000 ton parcels from Houston to China. So far, owners have stuck to their guns and suggestions of rates below $90/t have been fanciful. Base oil cargoes of 7,000-8,000 tons from Houston to Singapore, for example, were booked in combination with 10,000 tons of paraxylene to China for a combined rate of around $100/t. Unless demand improves, the remaining space may however fetch something closer to $90/t.

Transatlantic eastbound is pretty flat, with hardly any styrene remaining. Rates remain a theoretical $50-51/t for 5,000 ton parcels, but a firm requirement might challenge these levels and produce something in the $40s/t.

U.S. Gulf to India-Middle East Gulf has been reasonably active and an outsider has gone on berth within February, but the ship has some remaining space to fill, which is an opportunity to negotiate for a lower freight than the usual $90-100/t.

However, Southbound into Brazil is fairly strong and there is not much space left for the rest of the month, yet there is a variety of chemicals that are looking for space which suggests that freights will remain stable or firm for the time being.

Europe

The market in the North Sea and Baltic is tight on prompt space. The reason is twofold. Firstly, strong contractual demand means there is less space available for spot fixing, and we know of several fleets that are almost booked until March. Secondly, bad weather and strong winds have caused delays throughout the region, particularly along the United Kingdom coasts and the English Channel, while in the Baltic, ice has become an issue. So far, base oil ports such as Riga and Liepaja in Latvia have thin ice along the coast and alongside the jetties, but at Kaliningrad, Russia, the ice is reported to be 10-15 centimeters thick offshore. Kotka and Hamina, in Finland, have ice that is 15-25 cm thick inside the port, but the ice has not spread that much out to sea.

Southbound into the Mediterranean is very lively and owners are faced with a wide selection of cargoes. Base oils do feature, especially into Turkey, and rates are a little higher than a week or so ago. Parcels of some 3,000 tons from Rotterdam to Istanbul are likely to fetch $70-75/t during this period of tightness.

Northbound is reasonably active and owners are often able to push through small increases due to the lack of competition. A 3,000 ton parcel of base oils from Black Sea to Antwerp-Rotterdam-Amsterdam would cost at least $75-80/t as completion space on a scheduled ship. The rate otherwise could be at least $10/t higher. A strong vegetable oil market is setting the pace from this area, with 5000-6,000 ton cargoes going to Egypt and South Turkey in the low-mid $30s/t.

Inter-Mediterranean markets are also reporting firm freights and a lack of space. For instance, we have seen half-a-dozen enquiries for parcels of 1,000-2,000 tons of chemicals from West Mediterranean into Turkey and the East Mediterranean unable to find a carrier for well over a week.

Transatlantic westbound is not as frantic as the previous week. The appetite for cargoes such as benzene and pyrolysis gasoline, whilst not extinct, has certainly diminished. The space situation has improved marginally and several prompt ships can be found, but rates remain notional. Owners are looking for levels between $80 and $90/t for 1,000 ton parcels from Rotterdam to the U.S. Gulf, while 3,000 ton cargoes are in the $60s/t and the target number for 5,000 tons is in the low $50s/t, though nothing has really tested this level so far.

Base oils have been noted looking for space. We see a lot of demand on the Europe to Asia route, but space is severely lacking. Rates are moving up to $105-110/t for 5,000 ton cargoes from Rotterdam to China. An owner did introduce an extra sailing on this route as we had expected, except that the ship will be more likely a March loader than a February ship. Base oils have been present and a couple of fixtures have been observed.

Europe to India-Middle East Gulf remains reasonably busy with enquiries of base oils, ethylene dichloride, pyrolysis gasoline, ethanol and aromatics seen. Vegetable oils from the Black Sea continue to soak up a lot of space that could otherwise be of interest to shippers of chemicals and base oils. A vegetable oil cargo of 7,500 tons from the Black Sea to 3 ports in Middle East Gulf fetched low $70s/t, for instance, which gives an idea as to the levels that base oils will need in order to compete for the space.

Asia

Business is slowly starting to reappear on the domestic Asia market after the lunar holidays. The first batch of cargoes is more or less a repeat of those that were quoted just before the holiday and which have yet to be covered. Some of these are for prompt shipment, but they are outnumbered by the vessels that are either fully open or have part-cargo space to fill. Rates in the short-term will therefore come under a lot of pressure and we will probably hear of discounting taking place. The remaining quotations have tended to be for later February. Most are for aromatics into China and Taiwan, but there have been a few base oils enquiries among them.

Asia export markets are struggling to come to life. Benzene arbitrages to U.S. saw more material fixed, but rates have diminished from the $60s/t into the $50s/t.

For Europe, there have been some benzene parcels, as well as acids, palm methyl ester and plenty of small parcels of solvents. Rates are a little weaker to Europe but about the same if going to India-Middle East Gulf.

Palm oil markets are poor and rates have slipped further, whether to the West or on the local routes into India and China. The eastbound route from India to the Middle East Gulf region was subdued during the lunar holiday period, but a bit more material has been quoted since. Totaling around 100,000 tons of cargo, there are requirements for styrene, paraxylene, orthoxylene, methanol, canola oil, glycols, linear alkyl benzene, ethanol, MTBE, paraffins and base oils. Rates are still somewhat sloppy however since there are something like a dozen ships fully open in the area that wish to return to Asia. Westbound has been stable with rates at about the same levels are before.

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.