SSY Base Oil Shipping Report

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Asia continues to register a slight increase in new business. However, neither the U.S. nor Europe is as active as would normally be expected in November.

Americas

The amount of space left in the U.S. Gulf for loading in the first half of November is relatively small and it had reached a point where it looked as if owners might be able to push through freight increases. One of the more active products on this route has been monoethylene glycol, but a series of plant production issues occurred in the U.S. Gulf last week which may cause the cancellation of some of those fixtures, in which case there could be a fair amount of open space after all.

Furthermore, styrene is only being talked for December, which just leaves products such as acrylonitrile, cumene, ethanol and vegetable oil.

A parcel of base oils is also under discussion from Pascagoula to Antwerp-Rotterdam-Amsterdam. Rates are probably still in the low- to mid $60s per metric ton for such a shipment, depending on how much space opens up from cancelled glycol shipments.

Only one commodity seems to matter at the moment on the U.S. Gulf-to-Far East route: ethanol. A substantial amount of cargo has already been booked, yet there are further ongoing enquiries. Styrene also continues to be seen. Owners estimate there is as much as 70,000 tons of styrene fixed for November to Asia, with yet more enquiries seen.

Traders have also been looking at possible mixed xylenes shipments, but commodity prices are very volatile and it is not clear yet if anything has been done. Only small pockets of November space exist at the moment, and even December is beginning to tighten.

Rates have not really reacted to the situation, and it should be possible to fix at the same levels seen in the past couple of weeks.

There is still a lot of epoxy coated space left for November into the India/Middle East Gulf region, and considering that most of the enquiries on the market currently are for ethanol, ethylene dichloride and phenol, all of which are unsuited for epoxy tanks, there is a real chance that base oil rates could be even more competitive than the mid- to high $60s/t that was booked last month for 7,000 tons to the west coast of India.

U.S. Gulf-to-the east coast of South America demand has been slow this week, and there are some scheduled vessels in November that still have completion space to Brazil and Argentina. Rates are on the weak side. Some space can be found from the U.S. Gulf to Chile on a ship that fixed 10,000 tons of caustic in the very high $70s/t.

U.S. Gulf-to-Caribbean shows more or less the same scenario as last week, with limited space until mid November. However, that there is even tonnage around for those dates is evidence that the route has begun to slow down, at least in comparison to the rather busy October period.

Europe

After a busier end of October, things have gone quiet again in the North Sea and Baltic. Ships are again starting to pop open in prompt positions, which is rather surprising since normally in November they would be booked forward by two or even three weeks.

Base oil exports have been moving at a reasonable pace from the Baltic, with suggestions of a cargo being booked into Turkey, which if correct would be the first one for a long time.

In spite of a fairly heavy list of cargo requirements, a few owners have accepted lower freight rates on parcels going southbound into the West Mediterranean. Easy chemicals in the amount of 3,000 tons from Rotterdam to Huelva saw levels in the low $30s/t, for example, although 4,000 tons of biodiesel to Fos is claimed to have achieved 37/t. Base oils have been a small part of the cargo mix which has included products such as paraxylene, cyclohexane, ethylene dichloride, caustic, acrylonitrile, ETBE, MTBE, methylmethacrylate, acetic acid and ethanol.

Rates are pretty standard on cargoes heading back up to Northwestern Europe. Nothing much is happening with base oils on this route.

There is clearly a shortage of prompt Inter-Mediterranean space in the West Mediterranean and a large number of cargoes are being shuffled around onto later loading dates in order to better fit with the ships that are in position.

Some spot base oil activity has come to light, as well as routine deliveries by the oil majors. Rates are generally stable, although the occasional fixture has been chalked up at a higher level than previously.

Transatlantic activity has been a much quieter week, yet there is still a lot of prompt open space to be filled. Rates are going down – 5,000 tons from Rotterdam to Houston are in the very low $40s/t. Some paraxylene was booked earlier last week, but that switched late on in the week into Canada rather than U.S. Atlantic Coast, and the remaining parcels started to look about going to Asia.

A couple of base oil opportunities have been discussed, but no fixtures have been mentioned so far.

Europe-to-Far East activity levels have improved, with 10,000 tons of paraxylene fixed to China and several further paraxylene and mixed xylenes possibilities seen. Ethylene dichloride, acrylonitrile and toluene have all been noted, and a small lot of orthoxylene was booked to China. Base oils, however, are not represented this week, apart from a term supply shipment. Minor freight increases have been detected, but there is still some November space left.

Demand remains strong on routes from Europe to the India/Middle East Gulf region and November space is gradually being soaked up. There are differing views as to rates, however, with the lowest rates for 5,000-ton parcels to the west coast of India being done in the mid $70s/t, with some parcels seeing $80s/t. There are a lot of small parcels around too, although base oils are not really in the picture presently.

Asia

There has been more domestic Asia business quoted over the past week, particularly where aromatics are involved. Cargoes of mixed xylenes, paraxylene and toluene into China have been more common.

A number of base oil possibilities have been sighted on most trade lanes this week. Prompt vessel space has tightened, yet owners still seem reticent about raising freight levels, preferring to ensure their vessels are fixed as far ahead as possible.

Benzene transpacific has still not really flourished. There is talk of higher benzene prices in the U.S. and some encouraging quotations have been seen for December. Meantime, rates are weak, and even small parcels of 2,000-3,000 tons from Korea to U.S. Gulf can be fixed in the $60s/t. Some base oil possibilities are being explored into the U.S. as well as into Europe.

Space possibilities to Europe, however, are less common, and November is just about all full.

Asia-to-the India/Middle East Gulf region is producing plenty of chemicals demand, with the occasional parcel of base oil to India or the Middle East Gulf. Rates are a perhaps a touch firmer – in the $60s and $70s/t for small lots.

Palm oil demand remains flat into India and China but more or less steady on the deep-sea routes.

The Middle East Gulf/India region is generally active with some cargoes sticking around for a week or two without getting fixed. A few base oil possibilities are being seen, along with cargoes of caustic, ethylene dichloride, styrene, benzene, paraxylene, orthoxylene, MTBE, methanol, linear alkyl benzene, acetic acid, glycols, acrylates, acetone, phosphoric and sulphuric acids, canola oil and ethanol to name the most common ones.

Eastbound demand for vessel space seems to be fairly well matched with tonnage supply. A couple of very large cargoes of 30,000-40,000 tons of mixed grades have been quoted, but there have also been a range of smaller parcels, from 1,000 tons up to 10,000 tons. Rates are pretty stable.

Traders have been looking at base oils from the U.A.E. into Turkey, but no deals have occurred because of the way that import licences will only be granted to blenders and not to traders. A couple of ships still have space from the Middle East Gulf although rates do not seem to have fallen at all.

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.

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