Styrene traders have flicked their attention over to Asia instead of Europe and all of a sudden a small amount of prompt space has opened up, which a couple of owners have interpreted as a signal to become slightly less bullish on their freight ideas. Rates for prompt 5,000-ton parcels from Houston to Rotterdam have therefore been adjusted downward to the mid $60s per metric ton, with second half of July ships willing to accept around $63/t.

Styrene is a volatile commodity right now, and there is a possibility that trade could still reappear on the route to Antwerp-Rotterdam-Amsterdam, and indeed there is still styrene being done into the Mediterranean, where 5,000-ton cargoes have been paying mid $90s/t to Turkey. However, as time goes on, repairs will be completed on the European styrene plants and this trade will eventually diminish.

Instead, there are still possibilities to ship monoethylene glycol, diethylene glycol, phenol, acetone, methylmethacrylate, lysine, fish oil and ethanolamines. As it turned out, the 4,000-ton cargo of base oils from the U.S. Gulf to Antwerp-Rotterdam-Amsterdam that fixed last week is reported to have gone in the mid $60s/t, which is significantly lower than expected.

Very little prompt space is available into Asia, although the situation needs careful monitoring as cargoes are constantly fixing/failing and space can become available with little advance notice. If styrene interest persists, there is a good chance rates will increase since ethanol is already carving out big chunks of July shipping space, and rates for ethanol are in the $70s/t region for 10,000-ton cargoes.

Some outsiders are looking to achieve $2 million for cargoes of 20,000 tons. That may seem a step too far right now, but there is so little fresh tonnage coming into the U.S. Gulf that such figures are perhaps not too fanciful.

All scheduled ships going from the U.S. Gulf to the east coast of South America are almost completely full, so when a requirement of 17,500 tons of base oils and chemicals was quoted there were only two candidates, one of which sought $1.2 million, which is quite a jump from earlier fixtures, while the only other offer was for $2 million. This perfectly demonstrates how little space there really is in the U.S. Gulf, and that even a minor increase in demand could have a substantial impact on all freight levels in the U.S. Gulf. On this route, ethanol is starting to be quoted into Brazil too, which actually may be beneficial as it could bring in some larger ships which might have the kind of space suitable for base oils.

The position list remains thin on U.S. Gulf-to-Caribbean routes, and there are many cargoes that need to be covered but are challenged to find space, even several weeks out.

U.S. Gulf-to-Colombia routes continue to act as the standard-bearer in this region, with strong contractual volumes and sufficient spot parcels demand, including base oils, to fill all remaining gaps. Base oils are also being quoted into Mexico, in addition to products such as ethanol, tallow, caustic and paraxylene. Rates remain firm.

On routes from the U.S. Gulf to the India/Middle East Gulf region, there is less emphasis this week on ethanol and ethylene dichloride and rather more on base oils, with a variety of cargoes quoted from Port Arthur and Lake Charles. Rates are a touch firmer at $87/t-$89/t for 5,000-ton parcels from Houston to Mumbai.

Europe

The North Sea and Baltic region is still rather lively, which comes as a welcome surprise to owners. Traditionally, factory closures and destocking over the summer period would normally cause this region to slow down, but right now it is underpinned by strong demand from the gasoline sector and products that go into its manufacturing process, such as pyrolysis gasoline, reformate, alkylate, raffinate, MTBE, ethanol and biodiesel. Spot sales of base oils are rather meagre, although term shipments have accounted for quite a lot of vessel space.

Southbound rates have crept back up again following an improvement in demand. Prompt space is therefore minimal. Some spot base oil activity has been detected with cargoes to Turkey, Tunisia and Bulgaria.

Northbound routes out of the Mediterranean appear to be a bit quieter and owners have had to spread their nets a little wider in order to secure enough cargo. Rates are still pretty solid, however. Biodiesel has been one of the most active grades, whereas base oils are not showing currently.

As it happened, all the Inter-Mediterranean ships that were prompt last week were snapped up and for a while it looked as though the Mediterranean would remain exceptionally tight. However, demand has not kept pace and one or two more open positions have become uncomfortably prompt again.

In the greater scheme of things, a handful of prompt ships is not that much of an issue. So far there does seem to be adequate business in the West Mediterranean, with renewed demand in the East Mediterranean and Black Sea – especially with smaller parcels of chemicals and also with medium-sized clean petroleum cargoes – that owners should be able to cover their ships for the next week to 10 days. Base oils have been reasonably busy, with a number of movements noted.

A shortage of prompt transatlantic space is responsible for an uptick in rates this week, rather more than an increase in demand. Cargoes of 5,000 tons of aromatics from Antwerp-Rotterdam-Amsterdam to the U.S. Atlantic coast are known to have gone in the very high $40s/t, and another 5,000-ton paraxylene shipment from Rotterdam to Charleston has been worked in the mid-high $40s/t. Base oils have been quietly nosing around, checking to see what rates are doing, while the 16,000-ton cargo from Livorno to Punta Cardon is believed to have been fixed.

Nothing much new has been quoted to Asia this week, which will worry owners with ships on berth in July. Rates have begun to slide in anticipation of plenty of available space. Cargoes are mostly small, apart from a possibility of 10,000 tons of ethylene dichloride. Base oils are not being investigated.

Rates for cargoes into the India/Middle East Gulf region continue to display some softness since there are still several prompt ships that have space, although most of these are now looking for cargoes out of the Mediterranean. Fewer positions are available from northwestern Europe. In the meantime, a little more demand has been seen in the parcels trade, including small lots of base oil, aromatics, ethanol, hexane, pyrolysis gasoline and acrylonitrile. The vegetable oil market from the Black Sea is also quite firm with steady demand for vessels.

Asia

Some routes, such as intra-Far East, are said to be slower this week, although the majority of ships appear to be fixed ahead by a week or two.

Southbound also continues its soft tone, with rates more or less unchanged.

Northbound demand has been strong, however, and space is scarce for the first half of July, causing rates to lift slightly. In terms of base oil, there is still a selection of cargoes looking for space from Korea and Japan, some staying in the area and others looking at Southeast Asia. There have also been some base oils back out of Southeast Asia and it is these that run the risk of paying higher freights.

The route to the U.S. is the more interesting one, with cargoes of benzene, MTBE, mixed xylenes, paraxylene, toluene and urea ammonia nitrate. Base oils are not active to the U.S. Rates are soft at the moment due to the proliferation of space on the route, with 9,000-ton cargoes fetching mid- to high $50s/t.

Space to Europe is more limited but demand is more fragmented, with plenty of small but high-paying parcels of chemicals around.

Routes into the India/Middle East Gulf region are starting to see more parcels activity, including some base oils, but rates are not thought to have changed much.

The monsoons and Ramadan are claimed to be having some impact on the palm oil trade into India, but the market remains steady into China and Europe. Rates to India are in the upper $30s/t while 18,000 tons of palm oil was fixed into the Mediterranean in the mid $70s/t.

The Middle East Gulf/India region is a bit slower on some routes such as eastbound to Asia, where there are fewer larger parcels quoted. Westbound, however, has attracted a fair amount of benzene interest to Europe and the U.S., with cargoes looking to move from Yanbu, Sikka, Kandla, Hazira and Mangalore. There is not much scheduled space around either and rates are holding steady.

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 12 0750 7507. In the London office SSYs Ian Roberts can be reached at fix@ssychems.com or +44 20 7977 7560 and in Singapore Jordi Maymi at +65 6854 7127.