Very little space to the Far East is left for May, even though yet more outsiders have been enlisted and put on berth. Ethanol is one of the main commodities again, but base oils have been ranked as one of the more active commodities with a couple of really large shipments to China from the U.S. Gulf. A third shipment is claimed to have been fixed, but this has still to be verified. Other requirements include styrene, paraxylene, glycols, methylmethacrylate, phenol, ethylene dichloride and acrylonitrile. Rates are reported to be weakening, but this mainly refers to forward shipments in June, and it is unclear if such a trend will really develop.

As predicted, transatlantic eastbound trade did indeed suffer from quite a drastic cut in freight levels, with brokers all suggesting 5,000-ton parcels from Houston to Rotterdam can be fixed in the mid- to high $50s per metric ton. There does not seem to be much genuine basis for such a shift, but because there is such a uniform voice calling for reductions, this may end up being a self-fulfilling prophecy as both owners and charterers alike heed calls for further decreases.

The only real fixture at such a level was for 5,000 tons of styrene, which was taken out of context because it was booked with 15,000 tons of caustic to Spain in epoxy-coated tanks, but such is the way the market works. Moreover, there are several ships that still have space for loading in May, and with the prospect of lower rates it is quite possible that the market that seemed so strong could indeed crumble.

What could save the day for owners would be if benzene really does begin to move to Europe, along with styrene since there is probably not much more than 25,000-30,000 tons of uncommitted space for the month, although there is the risk of previously-booked cargoes being cancelled should ships run late, which would free up yet more space. Interestingly, there are reports of 3,000-4,000 tons of base oil being fixed from Paulsboro, New Jersey, to Antwerp, Belgium.

Traders who have been unable to place material into the Far East market have started to evaluate freight levels for products such as phenol, ethylene dichloride and acrylonitrile to India instead. Shipment of 4,000 tons of base oils is also under discussion and there is some interest shown in moving acetic acid to India. Rates appear to be stable.

U.S. Gulf to Caribbean demand continues to overwhelm the supply of tonnage and with scheduled space so tight for the rest of May, it seems unlikely that all the requirements will actually be fixed. The majority of requirements are for small parcels of chemicals or vegetable oil, chiefly into Puerto Cabello, Venezuela, or Rio Haina, Dominican Republic. Base oils seem to be on a back burner for now.

With space available during May, rates in the direction of the east coast of South America seem to be softening. The arbitrage for ethanol is closed, and while there has been some movement of paraxylene, caustic, acetone, urea ammonia nitrate and smaller clean petroleum cargoes, base oils have been less visible. Judging by what else has been fixed, expect to pay around $79/t-$80/t for 2,000 tons of base oils from Houston to Santos, Brazil.

Europe

Ascension Day was a widespread public holiday in Europe and brought business in the North Sea and the Baltic Sea to an abrupt stop. There have been some high points with certain products, including base oils, seeing stronger demand. Unfortunately for ship owners, this was outweighed by a reduction in demand for other commodities which caused difficulties for some over the long weekend. Demand does seem to be rebuilding as the list of prompt ships has started to thin this week, and several easy-to-fix cargoes remain uncovered.

Southbound trade into the Mediterranean has been pretty quiet and some owners have found it harder to cover their ships than others, leading to more competitive freight levels being cited in some instances. It has again been possible to fix 4,000-ton parcels from Antwerp-Rotterdam-Amsterdam to southern Spain in the mid 20s/t, for example, and 5,000 tons of easy chemicals from Rotterdam, the Netherlands, to Gebze, Turkey, were booked at $50/t.

On northbound routes, it has been a week in which there has been ample space available for just about every requirement and loading window, and freights have been highly competitive on the whole.

The past week has produced relatively few new requirements on Inter-Mediterranean routes, causing more and more ships to become prompt. Charterers who have the second half of May requirements have been surprised to receive only a few offers, probably because so few ship owners have been able to schedule their ships that far ahead. Were it not for biodiesel with something like 15-18 shipments in the West Mediterranean, in particular, the week would have been a disaster for owners.

Base oils have been a bit more active, and aromatics, styrene, MTBE and caustic also created better opportunities, whereas vegetable oil and clean petroleum have been very slow.

It has been another slow week on the transatlantic westbound route. A small lot of base oils was quoted from Cartagena, Spain, to the U.S. Gulf, and there have been assorted parcels of wax, paraxylene, acid and urea ammonia nitrate, but hardly anything else. Rates are probably weaker, but with nothing being fixed against which to benchmark, it is tricky to determine actual levels.

By all accounts, base oils have been king on the route out to Asia, with plenty of cargoes being quoted to China, as well some cargoes of unconverted oil to Korea, some of which have been booked. Aside from this, there has been little else exciting and some of the ships in May might have great difficulty in filling. Rates are hovering around $80/t for 5,000-ton cargoes, but a well-timed cargo could see numbers drop into the $70s/t.

Base oil demand has been quite strong on the route to India and the Middle East Gulf too, with parcels noted into India, the Middle East Gulf, the Red Sea and a possible shipment into East Africa. The trade in small chemicals parcels has resumed, keeping rates stable for the smaller lots, while big slugs of vegetable oil and phosphoric acid take care of the ships that do not want to parcel up. Three cargoes, each of 10,000-12,000 tons of ethylene dichloride, have been booked from Stade, Germany, to India within May, all just about paying low- to mid $70s/t.

Asia

Both Korea and Japan were effectively closed for much of the week due to public holidays, and this in turn caused a major slowdown in most trade lanes within Asia. Aromatics in particular were almost bereft of deals, whereas at least there have been some base oils being fixed. Rates are highly competitive on most routes, of course.

Due to the holidays in Asia, there have been no real developments on transpacific shipments of benzene, paraxylene and mixed xylenes. On paper, the benzene arbitrage was closed, although that has not stopped some traders from investigating possible benzene movements later in May. Sulphuric acid has assisted some owners to reposition from Asia back to the Americas or to India.

There is still prompt space back to Europe and rates have weakened even further, with levels falling into the $70s/t for 5,000-ton parcels from Korea to Antwerp-Rotterdam-Amsterdam, representing a 30 percent decrease in rates over just a few weeks. With little sign of rejuvenation in the palm oil markets that underpin all the deep-sea routes out of Asia, things look rather grim for ship owners.

Unfortunately for owners, the India/Middle East Gulf region is not an area in which to seek refuge from the poor market in Asia since almost all the routes out of the Middle East Gulf are yielding lower freight levels than last week. Chemicals in the amount of 10,000 tons to China might fetch $47/t, but just $45/t to ports in Taiwan or Korea.

Numbers into Europe are lower too, with 4,000 tons of cyclohexane from Hazira, India, to Antwerp fetching low $70s/t, which is a drop of $10/t over a couple of months. Some base oil activity is reported out of the Red Sea and a few Iranian cargoes have been detected, but base oils otherwise seem to just be coming in from Asia and 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.