In common with almost all the main routes out of the U.S., there is hardly any remaining August space going to Europe, which has many charterers wondering how they will cover their requirements. A trader is looking to ship 1,500 tons of base oils from Houston to Antwerp within August, but even finding space for such a small volume is tricky.

Some of the last bits of space have been fixed away over the last week at rates in the $70s, $80s and $90s per metric ton for parcels of between 3,000 and 5,000 tons. These include cargoes of acrylate, styrene, phenol and lysine. There are a number of requirements waiting in the wings too, but for some traders who are accustomed to numbers in the $50s/t and $60s/t, the hike in rates comes as a shock.

U.S. Gulf-to-Far East is perhaps the weakest of all the routes out of the U.S. these days. There are several ships that can offer small pockets of space through August, but owners are hesitant to risk holding on to the space and being in a position to leverage rates upward when all the other ships have filled. Instead, owners are more than happy to cover everything as soon as possible, even if it means accepting rates in the mid or high $60s/t for 5,000-ton parcels to Mainport Far East, or perhaps low $70s/t, into China.

Base oils are not really workable in this direction, and cargo requirements are mainly for products such as styrene, acrylonitrile, ethanol, methanol, ethylene dichloride and phenol.

Contractual demand from the U.S. Gulf to the east coast of South America has been solid for yet another week, leaving hardly any space on scheduled carriers. There are, however, a couple of ships that have managed to free up some space and rates in the low- to mid $70s/t can be expected for 5,000-ton parcels of base oils into Santos, for example. Paraxylene in the amount of 10,000 tons was booked from Houston to Suape, Brazil, in the high $50s/t, as a guide.

So little space exists on ships heading into the Caribbean that many charterers these days no longer quote specific loading dates, but instead look for the next available ship. There are all sorts of requirements in this area, encompassing most types of chemicals, vegetable oils, and of course base oils.

Space is also scarce into Mexico, and levels between $35/t and $40/t can be anticipated for 5,000-ton parcels from Houston.

Some space is however available into Chile since a ship has gone on berth, booking 13,000 tons of caustic from U.S. Gulf to Chile in the low $60s/t.

There is no August space to speak of on routes from the U.S. Gulf to the India/Middle East Gulf region, but a vessel is advertising some space in September in coated tanks. Some grades of base oil from the U.S. have lost ground to very competitively priced cargoes from Iran, although higher spec products may still be workable. Freights will typically be in the upper $80s/t for 5,000-ton parcels from Houston to Mumbai.

Europe

The North Sea and Baltic region remains mostly unfazed by what should be the main holiday season in Europe, which would otherwise produce loads of prompt empty ships. But this is not the case.

What has happened is that spot and contractual volumes have faded slightly, and instead of receiving just one or two workable offers as was the case back in June and early July, now charterers receive four or five offers instead and are able to work more competitive levels. So cargoes that were paying 75,000, for example, now only cost 70,000.

Some base oils have been booked out of the Baltic, with parcels for the United Kingdom and Antwerp-Rotterdam-Amsterdam, and others destined for further afield. The small tanker clean petroleum market remains buoyant and ships are booked ahead by 5-10 days typically.

Several owners have remarked that it took some time to find southbound cargoes to reposition their ships back into the Mediterranean, but eventually all were successful. Since then, a number of larger cargoes of MTBE, ETBE, FAME, caustic, ethylene dichloride, acrylonitrile, ethanol, Lignin, styrene, orthoxylene, benzene and vegetable oil have appeared needing August shipment. Base oils have been present, but as term supply primarily.

In spite of it feeling quieter, there are relatively few prompt northbound ships around. All the same, rates have been rather more competitive. Aromatics in the amount of 6,400 tons from the west coast of Italy to Antwerp-Rotterdam-Amsterdam went for around 38/t-39/t, and 5,400 tons of easy chemicals from the west coast of Italy to the U.K. and Antwerp-Rotterdam-Amsterdam are understood to have gone for under 50/t. A couple of 3,000-ton wax cargoes were booked – one from Greece and the other from Egypt, at 70/t and 80/t.

It has been another week in which everyone has agreed the Inter-Mediterranean market feels quiet, yet wonders where all the prompt ships have gone. FAME has undoubtedly accounted for a big proportion, but there has been a varied selection of chemicals, clean petroleum, vegetable oil, acids and base oils.

Whilst several of the rates have been at strong levels, there have been a number of deals that suggest owners are content to have covered their ships for the next fortnight ahead and are not too upset that they have not achieved the highest rates obtainable. Methanol, for example, was booked in the amount of 5,000 tons from Kulevi, Georgia, to Lavera, France, at just $195,000, whereas 2,000 tons of ethanol from southern Spain to the west coast of Italy went for 110,000.

Some owners feel that transatlantic westbound has not been all that quiet, and point to cargoes of paraxylene, sulphuric acid, caustic, toluene, orthoxylene, acetone and base oils as evidence. However, rates talked seem to have slipped a little. Base oil cargo of 5,000 tons from the west coast of Italy to the U.S. Gulf achieved mid- to high $60s/t, for example, which is lower than similar recent fixtures.

Far East demand has not improved at all and there remains a lot of August space to fill. That said, rates have not floored completely. A base oil shipment of 4,000 tons from Rotterdam to Singapore collected low $90s/t and 1,000 tons of nonene from Rotterdam to Yangtze went in the $120s/t. These are levels that are perhaps slightly down but not yet tumbling.

On routes from Europe to the India/Middle East Gulf region, several prompt ships have had great difficulty in filling out of the Mediterranean and Black Sea. A couple took pyrolysis gasoline, aromatics and vegetable oil, but one ship found nothing and ended up going through Suez and took 3,000 tons of base oils from Jeddah to Mumbai at $44/t, despite being offered several alternatives that would have paid high $50s/t.

Asia

Public holidays in Singapore and Typhoon Soudelor have both had some bearing on spot activity in the domestic Asia market this week. Nevertheless, there have been some cargoes from Korea into China and also into Southeast Asia for August shipment that remain unfixed, even after one week of trying.

There are a number of somewhat prompt vessels open throughout Asia but the list is not extensive. Most owners have satisfactorily covered their fleets past the middle of the month. Rates may not be pretty, and the feeling is that owners will happily snap up what they see in order to buy more leeway.

Transpacific space for export remains very tight for August and rates are firmer. Competitive prices for Asian products such as benzene, paraxylene, urea ammonia nitrate, MTBE and biodiesel mean that demand for space still exceeds supply.

All the August space to Europe has now been snapped up too, so owners will be seeking higher numbers if they are to put extra ships on the route.

The Middle East Gulf/India region is very active on a regional basis. There are a lot of small base oil shipments taking place from Iran via the United Arab Emirates to India. The local clean petroleum market is busy, and there are plenty of chemical parcels, too.

Rates are strong for inter-regional business. A MTBE shipment of 12,000 tons fixed from Kuwait and Saudi ports to Oman at $23/t, and 18,000 tons of phosphoric acid from Aqaba to Al Jubail yielded low $30s/t.

Eastbound has produced some very polarised views from owners. Some have admitted they have had great difficulty in fixing their prompt ships, whereas others say that within the last week or so the market has become very busy and that there is a shortage of August space.

Westbound may not be as active, but ships are getting fixed and there is not a lot of outstanding space.

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