There is supposedly plenty of space on the route to the Far East, with most commentators suggesting that rates could fall further. However, there is only a minimal amount of prompt space around, with the first of the main contenders weighing in around mid-August.

It will very much depend on the line that those owners take. If they accept the general view that rates are indeed declining, they might give ground, but if they sense there are only a few candidates after all, they might take a different viewpoint and actually raise their rate ideas.

Much will depend on the styrene trade, which has stalled recently because traders have become wary about overcommitting, given the huge amounts of styrene fixed over the past couple of months. Ethanol is another product to watch. It is quiet at the moment but could flare up again. Base oils do not feature much at all, however.

Transatlantic rates have actually risen on the eastbound route this week. Prompt space has been tight for several weeks, and contractual demand heavy, leaving little space available for the spot trade. The pool of potential carriers that could go on berth is not actually that great either, and only slight upswings in demand from the other routes could swiftly tighten the tonnage position.

Rates for 5,000-ton parcels from Houston to Rotterdam, the Netherlands, have gone back into the mid $50s per metric ton, which is an embarrassment to those who anticipated rates in the low $50s/t. Base oils continue to move, mostly for the major refiners, but there has been some spot trade too.

There have been some open positions on routes to the Caribbean, with demand being intermittent. This week has seen a number of larger parcels, particularly of caustic, which will help clear out some of that space. On the base oil front, 2,300 tons of base oils were booked from the U.S. Gulf to Rio Haina, Dominican Republic, in the low- to mid $50s/t. The tender into Punta Cardon, Venezuela, has apparently gone to one of the traders not normally associated with this business, and it will be interesting to see if they source from the U.S. Gulf or Europe.

There is not a great deal happening to South America presently, which has triggered a small reduction in freight rates. Traders are talking about sending 4,000 tons of base oils from Houston to Santos, Brazil, and if the business is firm, it should be wrapped up with levels in the mid- to high $50s/t.

Europe

The North Sea and Baltic regional market has improved slightly, with owners reporting increased contractual volumes, some of which have spilled out onto the spot market in order to find tonnage that is prompter than the contractual vessels. Base oils have been fairly active, with cargoes moving down to the United Kingdom and Continental Europe from the Baltic, as well as several movements along the Channel coast. Rates are not strengthening, though.

The southbound route is described as healthier, with a better selection of cargoes. Biodiesel has been slower than normal, but other grades such as aromatics, acrylonitrile and base oils have helped fill the void. It would seem that a cargo of base oils may have fixed into Turkey from the Baltic.

Northbound demand has been patchy this week, keeping rates under pressure. Cargoes of caustic, pyrolysis gasoline and toluene have been noted, with an occasional base oil shipment for term customers.

Inter-Mediterranean trade had been dull for a while, but there has been a small resurgence in volumes over the past week or so, especially in the West Mediterranean where contractual nominations have been heavy, creating spot opportunities for owners. Caustic has accounted for quite some vessel space, while in the East Mediterranean, methanol has been more active. Base oils have also been spot-fixed, with some cargoes originating from the Black Sea and others being booked in the central Mediterranean.

Transatlantic space has tightened a notch for prompt loading, easing the constant downwards pressure on rates, at least for a little while. Further paraxylene cargoes have been noted, and there is the usual flow of urea ammonia nitrate and sulphuric acid, as well as some smaller base oil requirements.

On routes to the Far East, owners just about managed to fill all their July space in the end. The fixture lists threw up one or two surprises, including some styrene, paraxylene and some more base oils, with at least one large base oil cargo booked from the Black Sea and talk of another midway through August. Rates are stable for the time being, although there is quite a bit of August space looming.

The market into India and the Middle East Gulf has been reasonably busy too, with all sorts of small parcels being fixed. Space has been fairly tight, allowing a number of smaller ships on berth, including one with base oils from the Baltic into India and another out of the Black Sea. Base oils have also been pushed around into India from the Mediterranean and Continental Europe.

Asia

Contractual volumes have been holding up nicely along the main thoroughfares, but spot demand is reckoned to have slumped, especially in Northeast Asia. Rates have consequently come under intense pressure, with talk that 3,000-ton parcels from Korea into China have lost $2/t, or almost 10 percent over the week. Looking at the position lists, it is not easy to see why the rates have gone down by so much, since a large chunk of the fleet is booked into August, with many ships booked towards the middle of the month. Open positions only reveal part of the story, however, and clearly, owners confidence has been rocked.

The situation does not seem as serious in Southeast Asia where rates have stabilized, although on the face of it, there are more open ships in this area. The palm oil market is starting to show a bit more life, which could be one reason why owners prefer to maintain presence in Southeast Asia. Base oils have been sluggish. Rates into India have been in decline, and it could be possible to fix 4,000 tons of base oils from Korea to the west coast of India in the $47/t-$49/t region.

The transpacific benzene market has in fact been busier than most observers have given it credit for, although several of the shipments in July have been really big volumes and thus have only benefited a handful of owners. A cargo of paraxylene appears to have fixed from Korea to the U.S. Atlantic Coast in the mid $50s/t. There has also been mention of mixed xylenes and pyrolysis gasoline to the U.S., while an oil company is reportedly looking to ship 10,000 tons of base oils from Korea to Brownsville, Texas. It should be possible to fix 5,000 tons of base oils from Korea to the U.S. Gulf in the $40s/t nowadays.

The market to Europe is really very quiet. The August cargo of 7,000 tons of base oils from Malacca, Malaysia, to Antwerp-Rotterdam-Amsterdam has fixed in the mid $50s/t, which is almost half the rate that was being done for this business a year ago.

The entire market in the Middle East Gulf is in the doldrums right now. Rates continue to slip on both eastbound and westbound routes due to a paucity of spot market business.

Adrian Brown is a senior market analyst for chemicals and base oils with SSY Shipbrokers, London, can be reached at fix@ssychems.com or +44 12 0750 7507. Information about SSY can be found at www.ssyonline.com. In the Houston office, Panos Giannoulis of SSY’s Chemical Tanker Department can be reached directly at panos@ssychems.com or +1 (713) 652-270 and Jordi Maymi in Singapore can be reached at +65 6854 7127.