Establishing a freight rate for prompt shipment from the U.S. Gulf to Europe is somewhat hypothetical at the moment since there is so little prompt tonnage around. There is therefore little point in seeking competitive levels and so many charterers have deferred their shipments until later in August to match the influx of ships into the region.

Apparently there is still a good window of opportunity to move styrene to Europe, but this rather depends on locating enough material because U.S. plants have not been operating at full stretch. Beyond that, there has been bits and bobs of vinyl acetate monomer, acrylonitrile, nonene, ethanol, ethylene dichloride, caustic, vegetable oil, phenol and glycols. The large requirement of base oils from the U.S. Gulf into Nigeria has resurfaced, but is now for loading in the second half of August.

There is still some prompt space around from the U.S. Gulf into Asia, but cargo enquiries are fast disappearing. Ethanol is still popular, and there has been some prompt styrene fixed. Cumene, acetone and ethylene dichloride all hold potential, but nobody is looking at base oils on this route. Rates are static for the moment.

There is nothing really new to report about the U.S. Gulf-to-South America route. Space is confined mostly to mid-August and onwards. A couple of prompt caustic requirements that have been quoted might entice some additional tonnage on berth, but freight levels could potentially be in the mid $70s per metric ton for 5,000-ton parcels from Houston to Santos.

Space remains scarce for prompt loading on the U.S. Gulf-to-Caribbean route, but some traders have learned to cast the net further ahead, and a cargo of base oils is heard to have been fixed into Rio Haina already for the second half of August. The tender for the next load of 5,100 tons of base oils from the U.S. Gulf into Colombia has not been awarded since the dates have changed several times already. There is a lot of cargo around in this area, and rates are still climbing.

There is not much new to report about the route from the U.S. Gulf to India and the Middle East Gulf either, apart from some talk of ethanol and still potentially some ethylene dichloride and base oils. Rates are much the same as before.

Europe

The North Sea and Baltic region is fast running out of steam. The majority of owners have been able to employ their ships until the first week of August but thereafter it becomes much harder since contractual volumes appear to be reduced and spot demand has definitely declined. Rates are therefore expected to come under a lot of downwards pressure.

The occasional base oil fixture has been recorded, but there is nothing really exceptional of note.

On southbound routes, the end of Ramadan did eventually inspire some fixing into Turkey and North Africa, but there has nevertheless been some prompt space in this direction that has ended up having to double-handle the space, first by fixing into the West Mediterranean and then booking cargo from the West Mediterranean into the East Mediterranean. Owners have been more willing to compromise on rate levels too, and this trend is expected to continue through August.

Demand has been adequate on northbound routes over the past week and the majority of ships have been able to fill up. Pyrolysis gasoline has been noted on a number of occasions, and there have been enquiries of toluene, paraxylene, C7, naphtha, wax and base oils. Some of the base oils would seem to be for eventual transhipment out of Europe.

Small tanker clean petroleum rates remain strong, reflecting the tight supply of this size ship in the Mediterranean – 15,000 tons of clean petroleum from South Spain to Antwerp-Rotterdam-Amsterdam achieved $30/t, for example.

The market has not been quite as intense on inter-Mediterranean routes as in recent weeks, and there have been a couple more prompt open positions. All the same, there has been quite a lengthy list of prompt requirements, although these will probably start to lessen as we enter August and the main holiday season in the Mediterranean area.

The amount of new business quoted on transatlantic routes is less, and prompt space has been seen on several occasions. Rates are a touch lower. For example, 10,000 tons of paraxylene from Rotterdam to the U.S. Atlantic coast fixed at $38/t, but a similar cargo had been done the week before by the same owner at $39/t. A couple of other paraxylene shipments have been booked into Mexico and Montreal, but European paraxylene suppliers have been losing market share to producers in India and the Middle East Gulf over the past week or so.

A parcel of bright stock from Antwerp-Rotterdam-Amsterdam to the U.S. Gulf or Brownsville had been under consideration, but is believed to have been shelved for the time being.

There has been minimal interest in shipping chemical products from Europe to Asia this week. Even some of the base oil possibilities remain purely tentative. There is plenty of August space approaching meanwhile, and although owners are historically inclined to dig their heels in when it comes to chopping freight rates on this route, a firm requirement to a scheduled port could perhaps yield some very competitive numbers.

On routes between Europe and India-Middle East Gulf, several ships still possess prompt space from the Mediterranean, keeping rates under pressure. Some base oils have been discussed from the Mediterranean into India and the United Arab Emirates. There has also been talk of pyrolysis gasoline and hexane to be shipped from the East Mediterranean, and some ethylene dichloride from Stade to India. Vegetable oil demand from the Black Sea appears weaker.

Asia

Trade in the domestic Asian market has been affected by new concerns about the Chinese economy, and as a result of developments on the Chinese stock exchange, banks have become more cautious and tightened their credit lines, making it harder for traders to undertake new business.

Intra-North Asian trade seems to be slower, as does the southbound market, and there are examples of prompt space in these areas. Northbound has seen a few more parcels appear for August shipment, such as pyrolysis gasoline and paraxylene, and larger cargoes of 10,000-15,000 tons have been seeing firmer freights due to a booming clean petroleum market that is sucking in any tonnage of this size.

Base oil demand, however, has been patchy throughout the region.

As it turned out, benzene has been very active from Asia to the United States, with some owners suggesting that around 90,000 tons has already been booked for August. Space has become scarce too. In addition, at least one cargo of MTBE has been fixed to Mexico, with further interest being shown. Also, 6,000 tons of cumene has been booked to the U.S. Gulf from Korea. Freight levels are being pushed back into the $60s/t for this size, which somewhat precludes any spot base oil opportunities.

Freights to Europe are mostly unchanged. The main carriers are just about full for August, leaving the outsiders to pick off the small parcels of chemicals to and from the unscheduled ports. Rates are pretty much the same into India too, thanks primarily to the steady palm oil market.

The Middle East Gulf-India region is pretty strong still. Regional trades are active between India and the Middle East Gulf, with at least 120,000 tons of regional requirements noted, excluding Iranian business and a further 50,000 tons or so of small local clean petroleum movements.

Rates are firm. For example, 3,500 tons of base oils from Hamriyah to Karachi have been worked at $210,000, for example. Delays are still a big problem in the area, especially in Al Jubail and certain Indian ports, but also the monsoons are hitting the western part of India, making it difficult for ships to maintain their usual steaming speed.

On the Eastbound leg, the usual mix of ethylene dichloride, pyrolysis gasoline, methanol, MTBE, ethanol, paraxylene, orthoxylene, glycol, benzene and base oil has begun to appear following the end of Ramadan, keeping rates stable.

Westbound has seen a surge in the amount of paraxylene and benzene being fixed to Europe and the U.S., with several cargoes being booked in the $70s and $80s/t for 15,000-ton quantities.

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.