Heavy demand for space continues to stoke the fires in the U.S. Gulf. Asian markets are a little more promising, while Europe is unchanged.
On routes to the Far East, all that is left in terms of space for March is the odd tank here and there, but virtually nothing larger than 2,000 metric tons. Even April is turning out to be busy and space is beginning to look tight enough that owners are seriously considering sending further vessels over from Europe in ballast and putting them on berth from the U.S. Gulf to Asia. Rates in the mid $80s per metric ton seem to be the incentive.
Several more methanol cargoes of 30,000 tons have been tabled towards China, but so far all seem to have been booked in the mid $60s/t. Styrene demand remains strong and owners stand a better chance of landing a rate of $85/t for styrene than they do perhaps for anything else currently. Base oils remain invisible.
There are some who have begun to question whether the transatlantic eastbound route has finally run out of steam, basing their assumptions on the lack of obvious market quotes and on the fact that there are still some pockets of space around within March.
Owners, however, take the view that an isolated ship is not representative and that many requirements are simply temporizing until more space opens up. Consequently, most owners continue to push for rates in the $65/t-$75/t for 5,000-ton parcels from Houston to Rotterdam.
Base oils in the amount of 8,000 tons were worked from the U.S. Gulf to Northwestern Europe, but failed to complete. Some suspect that they ended up on contractual tonnage instead.
Rates to India and the Middle East Gulf have increased yet further by a couple of dollars as demand for big cargoes of ethanol and ethylene dichloride swamp what space remains between now and the end of April. Owners are targeting levels in the mid $80s/t for 5,000-ton parcels from Houston to Mumbai. According to owners, base oils are being assessed again on this route.
The shortage of vessel space to the Caribbean is the key factor to getting anything fixed in this market; the level of freight is almost secondary. During this period, rates are unpredictable. What would have cost $65/t, for example, is now priced at $85/t, or even $95/t. Only periodically will one of the regular owners go back to accepting $65/t.
Base oils have been moving along traditional routes within the Caribbean, with nothing much new showing so far on the spot market.
Business to the east coast of South America has been strong. Cargoes of ethanol, caustic and paraxylene remain outstanding from the previous week. Rates are unchanged for the time being.
The North Sea and Baltic spot market is performing well overall, and quite a few vessels are already fixed through to the end of the month, especially those ships heavily involved in Baltic work. A few ships are open in prompt positions, but they are in the minority, with most ships only available in a week to 10 days time.
Base oils have been busy out of the Baltic again, with a few more shipments spotted in the North Sea.
It has been a little quieter on southbound routes into the Mediterranean this week and some cargoes have realized slightly lower freight levels. Vegetable oils in the amount of 5,000 tons fixed from Kaliningrad, Russia, to Beirut, Lebanon, and Damietta, Egypt, in the mid $60s/t, which illustrates the kind of level that could be expected for a similar shipment of base oils.
Northbound cargo volumes remain reassuringly stable this week, and there is not much evidence of vessels struggling to fill. Further cargoes of base oil have been studied, but will have to compete for space with cargoes of pyrolysis gasoline, styrene, benzene, toluene, biodiesel and glycerine.
The majority of vessels on routes within the Mediterranean are well-employed. Even those in the East Mediterranean have been picking up a little more business and thereby have avoided being caught out with nothing to do. Base oils have been active, with requirements noted into Morocco, Egypt, Greece and Turkey.
The forthcoming closure of a base oil refinery in Northwestern Europe is being felt on the shipping market. Where once a ship owner would have designated a ship for a contract voyage into the Mediterranean, that contract now looks as though it will be supplied by a third party refinery in the Mediterranean, which is positive for inter-Mediterranean movements for that owner, but it may be felt more keenly when that owner has space southbound into the Mediterranean from Northwestern Europe.
The westbound transatlantic market has not been that busy, but prompt space has not been as plentiful as last week. A pyrolysis gasoline shipment of 6,000 tons from Ghent, Belgium, to the U.S. Gulf fetched low $40s/t, for example. Several paraxylene possibilities abound and there has been a further shipment of pyrolysis gasoline from the Mediterranean. Base oils have been enquiring from both the Mediterranean and Northwestern Europe into the U.S. Gulf.
March space from Europe to the Far East has almost all gone, which might put a little upwards pressure on rates. In reality, though, apart from some of the bigger lots of methanol, owners may be reluctant to put a ship on berth for just 5,000 tons of cargo and then run the risk of not filling.
More base oils have been fixed to China this week; 11,000 tons of hydrocracker bottoms from Flushing, the Netherlands, to Korea were also said to have been covered.
As with last week, there are a myriad of small parcels vying against one another for the last bits of space to India and the Middle East Gulf on the scheduled carriers. Rates are consequently quite firm, with mid $80s/t being talked about for 5,000-ton cargoes from Rotterdam to the west coast of India. Some traders have been looking to see if it makes sense to move base oils in this direction.
There are several trade lanes within Asia where space has almost completely gone for March. There are, however, other routes which have plenty of space and therefore ships can be expected to ballast to where they are required. It might not mean that rates go down, and in some instances it has led to higher numbers being done.
Intra-Far East remains hot, though not as fiery as in the previous week. Northbound and intra-Southeast Asia have also noted a slight uptick in the amount of demand, but with the palm oil market still mostly subdued, there should still be opportunities to pick off space in these two areas. Rates are therefore not really going anywhere for now.
There is a major palm oil event taking place in Kuala Lumpur currently, after which there may be more export interest which might take out some of the prompter positions.
Benzene exports to the U.S. are very lethargic and there is ample space available. Some of it is on dedicated methanol carriers bringing methanol to China, but realistically they are not the best candidates, because with methanol demand still strong, these ships will probably want to head straight back to the U.S. Gulf or Caribbean to reload the next lot of methanol.
Most of the ships that were pushing space around from Northeast Asia to Europe have just about managed to fill. Small parcels of vinyl acetate monomer, acrylates, acids and acetates have been responsible. Base oils have also played a part, with the next lot of 10,000 tons already being lined up from Singapore for April shipment.
Regional trades in India and the Middle East Gulf have enjoyed another busy week with plenty of enquiries noted, including more clean petroleum cargoes, which have been less visible recently. Not so much base oil has been seen, apart from some material out of the Red Sea and a couple of new Iranian enquiries into the United Arab Emirates.
It is said that there has been more demand on the eastbound route. Methanol has especially been active, with 10,000 tons heard fixed from the Middle East Gulf to Mainport Far East at $50/t. Further enquiries of paraxylene, orthoxylene, benzene, pyrolysis gasoline, MTBE, ethylene dichloride, glycols, vinyl acetate monomer, linear alkyl benzene and MTBE have been seen.
Westbound business has generally been pretty steady. Paraxylene and benzene are some of the more active grades being fixed, but there have also been cargoes of vinyl acetate monomer, linear alkyl benzene, cyclohexane, biodiesel, glycol and methanol.
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 email@example.com by phone at +44 12 0750 7507. In the London office SSYs Ian Roberts can be reached firstname.lastname@example.org +44 20 7977 7560 and in Singapore Jordi Maymi at +65 6854 7127.