Activity levels have increased throughout all of Asia, and while some routes out of the U.S. Gulf and from Europe are also a touch busier, it seems to be a case of too little too late, as the remaining lanes continue to languish.
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As expected, December demand to the Far East has started to come good, with plenty of requirements around, such as cumene, ethylene dichloride, phenol, acrylonitrile, styrene and paraxylene. There is even an enquiry to ship 20,000 metric tons of methanol to China. Once again, however, base oils failed to make it onto the map. December space is becoming pretty scarce. Rates have been climbing steadily over the past few weeks with the very latest 10,000-ton cargo of aromatics being fixed in the vicinity of $60 per metric ton to China for loading in the second half of December, which is up from the high $40s/t that ruled throughout most of November.
Contractual demand remains steady on the eastbound transatlantic route, which is just as well for owners since the spot market is very patchy. Traders continue to check the possibility to ship styrene. Glycols, cumene and cyclohexane have also been studied. A pyrolysis gasoline trade of 20,000 tons was booked from the U.S. Gulf to Terneuzen, the Netherlands, for around $30/t. Its an unusual direction for pyrolysis gasoline and its the second such shipment recently, suggesting there may be an issue at a European plant.
The long Thanksgiving holiday weekend put paid to many of the usual requirements that pepper this region. Trade also suffered from the Latin American Petrochemical and Chemical Association (APLA) event at the start of the week in Buenos Aires, Argentina. Vessel space is judged to be ample for December so far, but that old villain, fog, has begun to make itself felt this week, and it can quickly gobble up space if it lingers for long enough. Base oils – 1,700 tons of which – are being attempted from the U.S. Gulf to Cartagena, Colombia, but so far, nothing for Rio Haina, Dominican Republic, nor Punta Cardon, Venezuela.
The APLA event will also have affected demand into Brazil and Argentina, and indeed, some of the regular parcels of ethanol into northern Brazil are missing. Rates are rather soft at present. Following the fixture of nearly 6,000 tons of base oils to Brazil earlier this month, there is nothing new on base oils in this direction.
Several traders are currently out with base oil requirements from the U.S. Gulf and U.S. Atlantic Coast into India and the United Arab Emirates, but quantities are fluctuating greatly, with 10,000 tons required one moment and then just 3,000 tons the next. There are some large lots of ethanol around too for this direction, but the two most recent fixtures have been full cargoes assessed between $1.4 million and $1.5 million, leaving little room for even small lots of base oil.
Most owners concur that it has been a rather slow week in the North Sea and Baltic, and the outlook for December is not that promising so far. Spot trade of base oils has not been too bad, with movements into the Baltic and out again, as well as activity along the North Sea coast. The problem is that the usual gasoline component products have been much quieter, and there has not been anything substantial enough to replace those volumes.
Owners report seeing rather more enquiry than of late on southbound routes, which allowed those owners with end of November positions to mostly be fixed away. Products such as pyrolysis gasoline, paraxylene, acrylonitrile and methanol have helped. Base oil activity has been pretty thin, though. Rates into Turkey for 3,000-ton parcels are still deemed to be in the upper $40s/t and low $50s/t.
The occasional parcel of base oil heading northbound has been observed, but these are mostly regular volumes for oil majors. Otherwise, there has been a steady flow of chemicals and vegetable oil parcels going north, and rates appear to be stable.
There are sufficient ships open in both eastern and western Mediterranean to ensure that freight levels remain suppressed. Equally, there is just about enough demand to clear out the majority of really prompt ships. Those owners trading in the west have been finding numerous small parcels of chemicals and biodiesel, which when strung together can actually provide a reasonable return since there is little or no ballast and no waiting time between voyages. Bad weather has been noticeable in the area, with the port of Sarroch, Italy, for example, closed for 10 days. The ensuing congestion is taking a long time to clear and also has the effect of eating into the amount of open tonnage. Base oils have been seen moving out of the Black Sea as well as from Greece, Spain and Italy.
Rates continue to climb on the westbound transatlantic route on the back of better demand and a tighter tonnage situation. Easy chemicals in the amount of 5,000 tons from Rotterdam, the Netherlands, to the U.S. Atlantic Coast were fixed in the high $30s/t, for example – up from the low $30s/t at the beginning of the month. Rates for the really large cargoes, however, are pretty static, with 20,000 tons of MTBE from Rotterdam to Houston going for $20/t again. Several cargoes of sulphuric acid have been covered for December, with numbers reported to be $26/t in one case and $27/t-$28/t in another, all of which are pretty routine. Base oils have not been visible, but 5,000-ton parcels from Rotterdam to Houston would probably pay in the mid $30s/t for prompt loading.
Rates are also climbing on the route into Asia. Again, demand has improved and space is pretty scarce through the first half of December. A 10,000-ton load of styrene is reported to have gone from Rotterdam to China in the mid $70s/t, for example. Further styrene has been booked from Tarragona, Spain, and will likely have gone in the upper $80s/t, if not more. Further requirements of styrene, paraxylene, mixed xylenes, phenol, acrylonitrile, orthoxylene and oxo alcohols have been noted, though base oil demand seems to have tailed off recently.
The market to India and the Middle East Gulf continues to be quite exciting, with yet more enquiries quoted in addition to all the various parcels of aromatics, acids, vegetable oils, ethylene dichloride, acrylonitrile and small speciality grades that have already been covered. Base oils are included this week despite some uncertainty as to how much more can be accommodated following recent deliveries.
Business has begun to improve on virtually every trade lane within Asia this week. It is said that companies are keen to have just about everything committed prior to the Chinese New Year, which, falling on Jan. 28 this year, is earlier than usual. Moreover, there is a slight push in line with the usual yearend phenomenon. There is also bad weather apparent in the northern areas, and owners would want a premium on the rate in order to keep their ships in those areas. Looking at rates, it may still be possible to fix 5,000 tons from Korea to mid China in the $18/t-$19/t region, but some owners are talking much more bullish numbers. Parcels of around 2,000 tons from Korea or Taiwan to South China can command mid- to high $30s/t, while 6,000 tons of benzene from Tuban, Indonesia, to mid China was reportedly booked in the high $30s/t. MTBE amounting 5,000 tons from the Strait of Malacca to southern China fetched mid $30s/t.
There is no benzene to ship on the transpacific eastbound route in December, and consequently there are several ships that still have part-cargo space to the U.S. A haul of 12,000 tons of cumene was fixed from Korea to Mobile, U.S., and 5,000 tons of biodiesel from Korea to the west coast paid mid $60s/t, which gives an impression as to the current rate levels. Base oils have been studied from Malacca, Malaysia, to Tampa, but are not believed to have come to fruition.
On routes to Europe, the picture is largely unchanged, in that small parcels to the Mediterranean and Antwerp-Rotterdam-Amsterdam still command numbers of $125/t-$180/t. Biodiesel in the amount of 10,000 tons from the Strait of Malacca to Italy fixed in the low $60s/t, which is quite a strong level, yet 4,300 tons of biodiesel from southern China to Antwerp-Rotterdam-Amsterdam went for a level reported to be in the $60s/t, which is perhaps a little lower than would be expected. Around 9,000 to 11,000 tons of base oils are looking for space in December from Malacca to Antwerp, but this is pretty routine business.
There are still plenty of spot market requirements in the India and Middle East Gulf region, including some base oil activity out of Karachi, Pakistan, and Al Ruwais, U.A.E.
The Eastbound market is becoming increasingly busy, and space is tighter through the second half of December. Cargoes of methanol, MTBE, styrene, paraxylene, mixed xylenes, orthoxylene, benzene, paraffins, vinyl acetate monomer, acrylates and glycol have been noted.
Westbound does not appear to be sharing the same rush of cargoes, and there is still open space for the first half of December. Base oils are being attempted from the Middle East Gulf into the Black Sea and France, and there are requirements for methanol, vinyl acetate monomer, glycols and phosphoric acid.
Adrian Brown is a senior market analyst for chemicals and base oils with SSY Shipbrokers, London, can be reached at firstname.lastname@example.org 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 email@example.com or +1 (713) 652-270 and Jordi Maymi in Singapore can be reached at +65 6854-7127.