U.S. Gulf-to-Far East has been quick to shrug off the lethargy caused by the Golden Week celebrations in Japan, and as soon as delegates began returning from the Asia Petrochemical Industry Conference 2015 meeting that took place in Seoul, South Korea, last week, business started ramping up.

May space has been very tight for some time, and already June contractual nominations are looking heavy, squeezing the amount of available space and bringing upward pressure to bear on rates. There are precious few ships that are fully open in the U.S. Gulf and those that are have a choice of routes, which also makes owners more bullish. There are lots of usual requirements such as styrene, ethanol, glycols, orthoxylene, acrylonitrile and some paraxylene, and there are also a couple of small base oil requirements to Singapore. Rates are stronger, which is to be expected. Numbers are already approaching $70s per metric ton for 5,000-ton parcels of chemicals to China, and smaller lots are around $100/t which is far from an early summer lull as some pundits had predicted.

There is not much space left on routes from the U.S. Gulf to Europe for May loading and rates are climbing quickly. From Houston-to-Rotterdam, 5,000-ton parcels are already well into the $60s/t. Cumene, styrene, cyclohexane and glycols are being discussed, but many charterers have realised it may be better to delay shipment if at all possible. A couple of large base oil shipments to Nigeria continue to be aired, and have been seeking space for several weeks already, but none has yet been booked.

Base oils have again been seen looking to ship to Colombia and Rio Haina, but May space is very scarce, with perhaps just a solitary scheduled carrier remaining. Rates to the regular destinations such as Mexico have carried on firming, with 5,000-ton parcels from Houston now commanding mid-high $20s/t as a guide.

Numbers are firm on the U.S. Gulf-to-the east coast of South America route. Scheduled vessels do not have much open space at all. Base oil cargo of 7,000 tons from the U.S. Gulf to Rio was heard to have been worked in the $80s/t, for example, which is a significant increase on earlier shipments. Cargoes such as paraxylene, caustic, acetone and parcels of solvents have been noted.

U.S. Gulf-to-India/Middle East Gulf activity has been rather slack over the past week or so, at least on chemicals. Base oils, however, still crop up with a couple of parcels looking for May and June space. A ship is on berth with space this month, albeit with epoxy-coated tanks but which should be satisfactory for heavier grades of base oil.

Europe

The North Sea and Baltic regions have been busy, unlike previous years when all the public holidays throughout Europe in May have tended to get in the way of business. Relatively few ships are open in prompt positions, with many having a week to 10 days of forward employment. The small tanker clean petroleum market has also been outstanding with many ships fully occupied and owners are reporting very strong earnings so far. Some spot shipments of base oils have occurred out of the Baltic, but the feeling is that stocks of material are not plentiful up there.

Things have not been quite as busy southbound as before and a few more open positions have begun to appear. So far, it has not left an impression on freight rates, but if it does carry on for another week there may be a few owners who become nervous and rates may take a dive. Spot base oil demand has been quiet, and instead there are parcels of biodiesel, caustic, benzene, paraxylene and MTBE.

Northbound remains heavily influenced by the tight tonnage situation in the West Mediterranean, there nevertheless appears to be several more ships able to go on berth, as well as a slight reduction in the amount of new business quoted which may ultimately lead to a slippage in freights.

Without doubt, the West Mediterranean sector is still very tight on available space, but over at the other end of the Mediterranean, things are rather slow and there are some prompt ships available. It is conceivable to expect those ships to ballast over to the West Mediterranean in search of work which may help balance out freight rates throughout the Mediterranean. Base oils have been moving quite steadily within the Black Sea, and at levels that are more in line with charterers ideas.

There is not quite as much open space as before on the transatlantic, which had been threatening to drag rates down. Furthermore, paraxylene demand has returned, as has caustic after a period of moving across to Europe from the States. Other products such as pyrolysis gasoline, sulphuric acid and urea ammonia nitrate are being lined up. Rates appear to have stabilised for the moment. Base oil action has been mainly focused on shipping material to Venezuela and also to West Africa.

There has not been a great deal of change on the Europe-to-Far East route. May space remains scarce but there are several June possibilities. Rates are essentially stable in the circumstances. Base oil cargoes are rather few and far between, with some benzene, toluene, and xylene noted instead from Northwest Europe and the Mediterranean, as well as some smaller parcels of solvents.

The range of products moving to India/Middle East Gulf is quite varied and numerous, which has the effect of keeping rates on a steady track. Traders are looking at ethanol into the Middle East Gulf, and there are several smaller parcels of aromatics, hexane, 2-ethylhexanol and base oils.

Asia

The volume of trade in the local market of domestic Asia has diminished, but how much of this is due to the Golden Week holiday and the APIC is not clear. A number of major chemical plants are also in turnaround during this time which may also be contributing to the general lethargy. For sure, there are ships that are open in quite prompt positions and this is keeping rates under pressure. Base oils have not been active, but again, this may be for the aforementioned reasons.

It would appear that the amount of unscheduled tonnage available in the Asia export area for cargoes to Europe, the U.S., India and Africa has diminished slightly, although there are still some scheduled ships with space. Aromatics interest has dulled for the time being, with benzene prices falling in all regions. Some products, such as cyclohexane and monoethylene glycol have been noted, as well as biodiesel and urea ammonia nitrate. Rates for small parcels to Europe remain strong but unchanged to the U.S. The market to India and the Middle East Gulf has picked up with all manner of small parcels, including some base oils and rates are deemed to be firm.

The amount of interest in shipping palm oils to China, India, Middle East Gulf, Africa and Europe has increased and rates are nudging higher. The greater availability of palm oil cargoes is likely to give a slight boost to freight rates for products such as base oils that wish to move into India/Middle East Gulf since owners will have more alternative cargoes at their disposal.

The Middle East Gulf/India region is very active and space is tight for the rest of the month and into the first half of June. A lot of prompt business is being quoted but is not finding the competitive levels that used to exist.

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.