Demand for styrene has surged in Europe due to some upcoming plant turnarounds, keeping transatlantic rates strong. The last couple of fixtures have been in the low $50s/per metric ton, but space on scheduled tonnage is tight for the balance of the month and owners are calling it mid $50s/t from now on. No discernible spot activity has been seen on base oils, and instead the movements reported have been purely contractual.

U.S. Gulf to Far East has gone quiet again, which leaves a number of prompt vessels still looking to fill their last remaining tanks. Ethanol is perhaps one of the more consistent grades to be seen in this direction, and this week it is supplemented by cargoes of paraxylene, ethylene dichloride, styrene and phenol. Base oils have been waiting in the wings, but supply constraints seem to be the main issue since freight levels are essentially unchanged, clinging to low- to mid- $60s/t for 5,000-ton parcels to China.

Base oils continue to be quoted on the U.S. Gulf-to-Caribbean route, mainly in the small category of 1,500-2,000-ton parcels, but it is encouraging to see some demand from this area. It also remains to be seen how the requirement into Venezuela is covered. Beyond that, there has been quite a few chemicals parcels in the area as well as tallow and palm oil cargoes. Rates are perhaps not going anywhere for the time being however.

U.S. Gulf-to-the east coast of South America is starting to see more interest in supplying ethanol cargoes to Brazil as well as caustic and styrene. Some small base oil parcels are being quoted into Brazil as well, and as space becomes a bit tighter, and it is already pretty tight on most scheduled carriers, there is a chance that rates could tilt upwards.

U.S. Gulf-to-India/Middle East Gulf is not so busy these days on base oils, although a large cargo of base oils was booked from Brazil to India. Ethanol continues to attract interest in this direction, with ethylene dichloride, acrylonitrile and some smaller parcels of solvents talked. End of March space exists on scheduled tonnage and a 2,000-3,000-ton cargo of base oils would probably fetch between $85/t and $90/t.

Europe

The North Sea and Baltic regions have been fairly busy over the past week or two, giving most ships a forward program of at least a week, with some ships fixed through until April. In several instances, freight levels have increased due to the additional demand for space. Base oils have been fairly busy out of the Baltic although some of the shipments are clearly being transhipped afterwards to deep-sea destinations.

Southbound has been very active into the Mediterranean and at times prompt space has been scarce. Freight levels are firm in general, with discounts a thing of the past. Numbers into the West Mediterranean are mid 30s/t for cargoes of 5,000-7,000 tons, for example, with higher numbers reported for ports that need special handling, or have onerous vetting restrictions. Base oils have been active, both for term shipments as well as spot market sales.

Northbound is influenced by the shortage of open tonnage in the Mediterranean and as a consequence freight rates can be very strong at times. It is encouraging to see a number of base oils being sent north, and not just in-house business.

Demand for vessel space has been massive on some inter-Mediterranean routes. In particular, prompt space is extremely scarce in the West Mediterranean and as a result some very high freight levels have been recorded, with owners being paid a substantial bonus in order to ballast their ships in from the Adriatic, Black Sea and East Mediterranean. Base oils are very active too with quite a large number of spot market lifting taking place. That the clean petroleum market is busy at the same time does not make it any easier in locating tonnage for base oils, and many of the sea-river ships are about to return to their normal trading areas of the Caspian and river systems, further depleting the available tonnage pool.

Transatlantic westbound has been fairly busy, mostly with parcels of aromatics, such as orthoxylene, paraxylene, benzene, pyrolysis gasoline, toluene and mixed xylenes. Rates have started to rise since March space is becoming quite scarce. One outsider had the temerity to ask for $60/t for 10,000 tons of paraxylene from Antwerp-Rotterdam-Amsterdam to U.S. Atlantic Coast, but even if this parcel fetches low- to mid- $50s/t that will nevertheless be an increase over recent deals. Some base oils have been noted but maybe European supplies of bright stock have been depleted because there are not many enquiries left in the market.

Europe-to-Far East has gone rather quiet and rates are beginning to drift downward. Demand is mostly comprised of chemicals parcels, such as paraxylene, acetone, butanols and some benzene. Base oil interest seems to be flagging.

Europe-to-India/Middle East Gulf continues to see requirements for base oils, however, as well as a wide range of chemical products. Rates are relatively firm therefore, and outsiders are being encouraged to bring their ships on berth.

Asia

Domestic Asia markets are gradually seeing more business quoted and rates look a little stronger on some routes, such as the intra-Far East service as more aromatics begin to find their way into China. From a base oil perspective, the amount of enquiry out of Korea in particular is staggering, although there are plenty of duplications as different suppliers gauge the freights and make their offers.

The situation should last a little longer as several base oil plants in the area are undergoing maintenance schedules, and this has allowed a fair amount of trade both northbound from Southeast Asia as well as a quite a number of cargoes looking to move into Southeast Asia from Korea and Japan.

Asia export markets are rather slow currently and rates are falling slightly, particularly to India, where there is a lot of tonnage on berth with space, but also to Europe. A parcel of 5,000 tons of base oils from Korea to the west coast of India could be expected to fetch less than $50/t these days, and may even be closer to mid $40s/t should the loading dates match those of some of the ships on berth. Rates to Europe are still over $100/t for the same parcel, but charterers are constantly probing to see if they can secure better levels. Rates are stable to the U.S.

Palm oil markets are starting to see more enquiries for late March and April, both to India and also to Europe. Rates may nudge upwards, in which case there may eventually be some impact on base oil numbers.

The Middle East Gulf to India region has been more active and there is an evident shortage of tonnage in the region for cargoes on the eastbound route. Rates have risen as a result, and charterers who had succeeded in pushing rates down into the $20s/t for 10,000-ton cargoes from west coast of India to Southeast Asia are seeing rates back into the $30s/t again. Smaller lots from India to south east Asia are drawing offers in the mid $40s/t. Westbound space is pretty tight too, but rates are more settled with no changes occurring.

Adrian Brown is a 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 Panos Giannoulis can be reached atfix@ssychems.comor +44 20 7977 7538 and in Singapore Jordi Maymi at +65 6854 7127.