There is a huge amount of pent-up enquiry from the Far East that is simply waiting for owners to show a position. Such is the kind of demand out there that a number of traders can simply swallow up an entire ship with a mixture of products should such a vessel materialize.

There had been predictions that ethanol and methanol demand would disappear, but as of now there are still cargoes looking for May space. Styrene is also very hot, and products such as phenol, ethylene dichloride, xylenes and even base oils are out there looking for space. Rates have not yet hit the $90 per metric ton mark that some owners feel this route merits, but numbers are not that far short.

Transatlantic space for April has nearly all gone, and those ships that have loading dates in the first half of May are filling up fast. Base oils have been spied on the cargo lists, along with products such as styrene, ethylbenzene, cumene, acrylonitrile, biodiesel, phenol and glycols. As with the route into Asia, there are a few owners who are targeting $90/t for 5,000-ton quantities, but no charterer has been compelled to accept.

Ethanol appears to be one of the main drivers on the route to India and the Middle East Gulf, with reports of a ship fixing a full cargo from the U.S. Gulf. Space is scarce, especially among the scheduled callers. Rates are still notionally in the $80s/t for 5,000-ton parcels to Mumbai or Kandla.

Base oils have been seeking space on trade to the Caribbean, but without a great deal of success. There are ongoing attempts to ship 3,000 tons of base oils into Colombia, and now traders are looking to send 3,000 tons into Mexico from Paulsboro, New Jersey. The large requirement of 16,000 tons of base oils to Punta Cardon was covered out of the U.S. Gulf as well. Needless to say, the lack of space is the main obstacle. Other requirements include ethanol, caustic, orthoxylene, acetone, mixed xylenes, vegetable oil, tallow and molasses.

A further shipment of 3,000-4,000 tons of base oils was accomplished from the U.S. Gulf to Brazil, reportedly in the low- to mid $70s/t for May loading. Others are attempting to move 8,000-10,000 tons of base oils to Brazil.

There is actually space on this route, and logic suggests there may be more owners interested in putting ships on berth so that the ships will be ideally positioned to lift the new seasons crop of vegetable oils from Argentina and Brazil, which might then act as a brake on further freight increases.

Europe

It has been another sluggish week for ships running in the North Sea and Baltic region. The recent OPEC meeting will have had some influence since a large proportion of business is connected to the gasoline market in one way or another. Blending components such as MTBE, FAME, ethanol and pyrolysis gasoline have been slower in the period prior to the OPEC meeting.

As it turned out, the meeting failed to reach an agreement on freezing output, which then triggered commodity price fluctuations which tend to stimulate shipping demand. Owners are hoping this is the case because rather more of them are threatened with having prompt open positions. Base oils have bucked the trend, however, and have been very busy, especially out of the Baltic.

Southbound demand has not been that busy over the past week or so, and vessel space has been a little easier to locate. Rates are perhaps a dollar or so lower, too. Several base oil cargoes are making their way into the Mediterranean – some even directly out of the Baltic.

On northbound routes, there has been a good run of enquiries up to the Continent this week, with parcels of toluene, FAME, wax, caustic, benzene, styrene, glycerine, ethanol and molasses. There have also been several notable base oil fixtures, including some larger lots from the Black Sea. Rates out of Spain will be pegged at around 27/-30/t for 5,000-ton parcels, while levels from the Black Sea will probably see $50/t or thereabouts.

For a while, there were actually a couple of prompt open positions in the West Mediterranean, reflecting the slowdown in inter-Mediterranean trade in the area. However, things have tightened up again slightly, which means that rates are back on track and at usual levels.

The Black Sea is still pretty quiet in terms of vegetable oil and clean petroleum, so rates can be fairly competitive. Base oils have had an active week, with quite a lot of material moved, and not just contractually.

The westbound transatlantic market has been poor, with too many ships and insufficient demand. Paraxylene has been the main grade being fixed, with 5,000 tons from Rotterdam to the east coast of Mexico covered in the mid $40s/t, and further paraxylene cargoes moving from the Baltic, Continent and Mediterranean.

Base oils have been represented, with 6,000 tons fixed from Cartagena, Spain, to Tampa, Florida, in the U.S., and a further 6,000 tons reportedly worked from the West Mediterranean. Some smaller parcels of base oils have also been attempted from the United Kingdom and Antwerp-Rotterdam-Amsterdam.

The level of activity from Europe to the Far East remains depressed. There is still April space left to fill, and several ships are hunting for May cargoes. Traders have been eying the possibility to ship base oils to China, but have equally kept their options open to send the material to India instead. Rates are soft.

A great many cargoes are out looking for space into India and the Middle East Gulf. With the regular carriers reporting a shortage of space it has been left to an armada of smaller vessels to go on berth and sweep up all the smaller parcels.

Traders have been looking at base oils, but the impression is that base oils are unable to stand the rates in the high $80s/t and low $90s/t that the chemical traders will pay for the space.

Asia

It has been a rather grim period for those owners trading on intra-Far East routes due to bad weather in the region resulting in port congestion. The situation is such that ships which are scheduled to discharge at 2 or 3 ports on the Yangtze River, for example, may have to wait 3-5 days to berth at each port. Consequently, some owners are keen to vacate the area entirely, which is pressurising freight rates on other routes, such as southbound.

Northbound markets are also out of balance as a result, since owners are less inclined to send ships back north, but there is not really enough business around in Southeast Asia to keep everyone busy. Consequently, there are gaps in ships schedules. In terms of base oil, it feels as though that there is not quite the same number of requirements out there as there were a few weeks back.

Nothing much has occurred on the deep-sea routes out of Asia to change the overall situation. Several ships have April space on the transpacific routes, but as with last week, owners are more bullish going into May.

Asia-to-Europe routes are considerably slower, and even small-parcel traffic has declined because traders cannot make the pricing work. Rates on larger parcels are very much under pressure, but even 2,000-ton parcels from Korea to Rotterdam can achieve rates of around $90/t, and maybe even lower than that with some coaxing. Some base oils are being quoted back to Europe, but they seem to be routine cargoes and nothing out of the ordinary.

India and the Middle East Gulf regional routes have had a slow week, with fewer than usual requirements quoted. Base oils traffic has not been so slow, with cargoes moving out from the usual Red Sea ports and from the Gulf, including Iran. Volumes do not compensate for the sluggish chemicals and clean petroleum demand, however, and rates are soft.

Eastbound routes are also suffering from a reduction in demand, with rates falling in the face of increased competition. Westbound is also struggling somewhat with a downturn in demand, but at least there are not so many owners queuing up to send their ships to Europe.

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 Bergen office in Norway, SSYs Ian Roberts can be reached at fix@ssychems.com or +47 55 54 05 00 and in Singapore Jordi Maymi at +65 6854 7127.