It would seem that at last, owners have twigged that there really is good demand on the U.S. Gulf-to-Far East route for their ships after all, and that perhaps they can dare ask for higher freights. Except that the revelation occurred just as the last few ships at the end of April filled up. Fortunately for the owners of ships in May, traders simply rolled forward their enquiries and the next batch of space is already full. Rates are slow to rise all the same, except perhaps for base oils.

Several large chunks of styrene and xylenes were booked routes from the U.S. Gulf to China in the low $60s per metric ton, but 12,500 tons of base oils to Singapore evidently forked out over $90/t. Other requirements include phenol, ethanol, ethylene dichloride, cumene, acrylonitrile and glycols.

Rates on the U.S. Gulf-to-India/Middle East Gulf route have started to firm as well, with prompt space having filled long ago. The next set of base oil shipments to India have apparently concluded for the second half of May and rates show a $5/t increase, pushing levels into the $80s/t. Ethanol is another commodity that is seeing good demand on this route.

Transatlantic eastbound put on a stout performance over the past week with several bookings of styrene, as well as acetic acid, phenol, acrylonitrile, base oils and cumene. Ethanol is rumored to have been done but has yet to be confirmed. Rates are largely in the $50s/t for the less sophisticated parcels, but some much higher levels have been recorded on things like phenol from Plaquemine, La., for instance. There is some space available into the Mediterranean mid-month, but not much firm business to help fill it out. The next lot of base oils to Italy are only in June and are already believed to have been booked.

The U.S. Gulf-to-Caribbean route is also tight on scheduled space, yet all the while the list of cargo requirements grows longer, allowing owners to think about raising freight levels.

There has been a base oils tender to Callao, Peru, for up to 2,000 tons for delivery during the first half of June, and there has also been another shipment of 3,000 tons of base oils into Rio Haina, Dominican Republic. And of course there is the massive requirement for base oils into Venezuela that will be very hard to source.

Contractual demand is strong on routes from the U.S. Gulf to the east coast of South America and no space remains on scheduled carriers until after the middle of May. Spot demand includes base oils, as well as caustic and aromatics, and if an outsider should be required, it may be more expensive than usual because of the competition for space from all the other routes that want the same ship.

Europe

The North Sea and Baltic regions are generally seeing steady contractual and spot volumes, and the amount of prompt open space is relatively small with the result that owners are less willing to concede any reductions in freight rates. A couple of base oil cargoes have been fixed out of the Baltic this week with mention of further volumes to come.

Public holidays in Turkey over the past week meant less demand from the East Mediterranean, which in turn saw some space start to open up on the southbound route. Rates are mostly the same; a 2,000-ton cargo of acrylonitrile from Rotterdam to Yalova, Turkey, for example, was seemingly worked at around $69/t. Base oil activity has been a bit thin on this route this week.

There have been many cargo requirements going northbound over the past week, but since the Mediterranean is already tight on space to begin with, it has been hard to get much business done, especially since rates are quite firm. Some base oils have attempted to move northbound in what would seem to be storage or transhipment opportunities.

Inter-Mediterranean traffic had yet another week of very good demand. Space in the West Mediterranean remains very scarce and rates tend to have a firm feel about them. On occasion there have been reports of more competitive deals being done, though this seems to be more to fit in with individual positions rather than across the board. Quite a few base oils are moving into Turkey from the Mediterranean and the Black Sea, and there are 3 to 4 ships that seem to be engaged in bringing base oils out to the offshore anchorages from where the product ends up on the export market.

The westbound market is looking rather fragile at the moment because paraxylene demand is mostly absent, leaving only some toluene and pyrolysis gasoline possibilities in the aromatics line, with the only additional demand coming from sulphuric acid and urea ammonia nitrate. Base oils dont appear this week, except for the chance that some may try to cover the Venezuelan demand with European material. Rates for the typical 5,000-ton parcels of chemicals from Rotterdam to Houston have slipped into the mid $40s/t.

Scheduled space on the Europe-to-Far East route, even in May, has become very scarce and as a result rates are untested. There are only some extremely high levels done out of the Mediterranean on outsider tonnage, but if that is to be a guide, then rates well over $100/t could be expected should an owner decide to go on berth. There are a few more spot requirements this week too, such as bigger lots of ethylene dichloride which – along with parcels of paraxylene, cumene, acrylonitrile, acetone and even base oils – could be sufficient to influence a decision.

The Europe-to-India/Middle East Gulf route is busy with lots of smaller parcels, which, when combined could provide owners with some interesting combinations and at rates that are fairly strong. Some of the base oil traders are active in this field too, and rates will probably end up in the $80-85/t region, with larger cargoes fetching lower than that.

Asia

There has been a disappointingly low amount of trade taking place within Asia over the past week. The normally busy intra-Far East area is very slow, for example, with few of the normal benzene, toluene, and xylene movements taking place. Owners seem to be grateful for the opportunity to fix base oils in the region, which is reflected in the rate trends. Parcels of 3,000 tons from Ulsan to Singapore, for example, are well under $35/t these days.

Only the northbound route shows any real demand, and that is mostly for products such as styrene, methanol, MTBE, paraxylene and clean petroleum. The occasional base oil enquiry does slip out but it is not frequent, or else it forms part of a term sale by major producers.

The only base oils on Asia export routes are term supply arrangements, or the occasional small parcel of high viscosity material to a European customer. On the whole, the route is pretty slow and there are several ships which are looking to go on berth. Rates have not really been tested and so remain notionally unchanged this week.

The market into India, however, is pretty busy. There has been an endless succession of sulphuric acid shipments as well as bigger lots of caustic, benzene, acetic acid, styrene, solvents, toluene, etc. Rates have bounced back up and a 5,000-ton parcel of base oils from Korea to Mumbai would now fetch mid $50s/t at least, unless it could piggyback on a ship already scheduled.

Indias palm oil market has been showing a bit more promise recently, but even that has not jolted rates any higher. Chinese trades are steady and rates are unchanged. Demand to Europe is slowly picking up and rates have started to stiffen. It is said that $48/t is the new figure into the Red Sea too, which is up slightly.

The Middle East Gulf/India region is pretty active and a number of prompt requirements rumble on without getting fixed. Part of the problem is that charterers and owners do not see eye-to-eye as far as freights go, and this week has seen charterers adopting a more relaxed approach in the hope of making owners a bit more anxious and then driving rates down from current levels.

Eastbound has plenty of cargo, however, and it may be hard to provoke such a reaction.

Westbound is also pretty robust and there is not a lot of open space, which suggests rates will remain steady or possibly even firm, if more cargo comes onto the market.

Adrian Brown is a 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.