The U.S. Gulf-to-Far East route continues to be the most active trade lane anywhere in the world. Scheduled space in February has virtually all gone, while even in March there are only a couple of ships with small amounts of space here and there.

Owners who have been able to hold back their ships are probably poised to do very well for themselves, with rates anywhere from the mid $70s per metric ton for 15,000-ton cargoes, up to $90s/t for 5,000-ton parcels. Methanol is the latest product to join ethanol and styrene as the hottest grades around.

Base oils have been represented this week by traders looking at 6,000 tons from Paulsboro to Singapore or China, in addition to the 3,000 tons from Port Arthur to Singapore that was first quoted over a week ago.

Transatlantic eastbound trades continue to flourish. Methanol, ethanol, cumene, cyclohexane, glycol, phenol, acrylonitrile, urea ammonia nitrate, vegetable oil, molasses and acetic acid are among the foremost cargo grades being quoted. The only base oil cargo logged so far this week has been a regular cargo of 5,000 tons into Italy. Freight levels are understandably firm with vessel space becoming tighter.

Trade to India and the Middle East Gulf is stable. Ethanol, methanol and ethylene dichloride are the prime cargoes on this trade where freight rates for 5,000-ton parcels from Houston to the west coast of India are typically around $80/t these days, making it harder to fix ethylene dichloride because it can only stand a freight level of up $70/t due to the cost of ethylene in the U.S. Gulf.

The Caribbean is full of cargo requirements, and while most of the smaller parcels end up getting covered, some of the larger lots are becoming harder to fix, unless some larger vessels are drafted in as additional ships.

The base oil tenders into Rio Haina and Cartagena, Colombia, appear to be uncovered with the receivers still undecided. A small lot of base oils has been quoted out of North Brazil to Tampa.

U.S. Gulf-to-the east coast of South America is one of the quieter routes by U.S. standards. Small parcels of solvents have been used to fill up the last gaps on the scheduled carriers. Base oil has not been seen this week.

Europe

Last weeks tally of base oil fixtures from the Baltic was almost an all-time record, but the past couple of days have been pretty quiet by comparison. There has been a number of spot base oil shipments in the North Sea, too, in addition to the regular volumes moved.

In fact, the region has been fairly stable with most ships avoiding prompt positions. The region has been buffeted by strong winds which have caused some delays in sailing schedules. The Baltic is also starting to record more ice and lower water temperatures in the parts that are still ice-free, and rates are starting to firm.

Southbound has seen a reasonable level of demand during the week. A greater number of biodiesel cargoes have been booked while many routine deliveries have also been noted. Rates continue to ease down, in common with most of the other coastal routes in Europe, as owners adjust freight levels to the lower cost of bunkers. Base oils in the amount of 2,700 tons fixed from Rotterdam, Netherlands, to Vado, Italy, at around $40/t, reportedly.

The northbound route has been rather quiet, with fewer regular cargoes, particularly on aromatics and biodiesel. Base oils have been moving for regular shippers but spot opportunities have not been much in evidence this week.

Inter-Mediterranean markets are mixed. In the West Mediterranean, space is pretty scarce and rates are strong – 3,300 tons of biodiesel from Huelva, Spain, to the west coast of Italy paid around $40/t, for example, with 5,000 tons into the Adriatic Sea paying low $40s/t. The East Mediterranean is less busy, however, with fewer clean petroleum requirements. Base oils are reputed to be moving into Turkey from the Black Sea and there have been a number of spot base oil fixtures from the Mediterranean too. Ice is only an issue in a few Black Sea ports, namely the shallow river berths.

Transatlantic trade has been fairly slow this week. Some larger lots of paraxylene, FAME and sulphuric acid have been bandied around, but the arbitrage for most other regular products is currently closed. Base oils have not been active, with only some routine business being quoted. Rates have edged downwards slightly.

Europe-to-Far East business has improved somewhat with the market starting to look tight on February space for a change. Cargoes such as orthoxylene, paraxylene, mixed xylenes, acrylonitrile, styrene and ethylene dichloride are the main contenders for space. Base oils have been mostly quiet, although there is a whisper that a trader is quoting a cargo which could turn out to be bright stock. Rates are stable.

Space to India and the Middle East Gulf is tight for most of February, thanks to an increase in contractual volumes which has occurred at the same time as an increase in spot volumes. Many of the requirements are small parcels which pay in the $80s/t and $90s/t. Base oils have been infrequent, although 5,000 tons were heard to have fixed into Pakistan from the Mediterranean.

Asia

In domestic Asia trade, there has been one last push by charterers to clear out the last remaining prompt cargoes before leaving for the Chinese New Year celebrations. This boost to business has helped many owners cover their immediate ships but it has left a substantial number still with a lot of work to do to cover the entire holiday period.

Fortunately, there has been a number of cargo requirements for loading immediately after the New Year, but at this stage it does look like there will be a shortfall of cargoes which will have owners chasing around, and there are good prospects for competitive rates at that time.

Base oils have not disappeared from the scene completely, and there are some that are already quoted for the second half of February. Needless to say, the coming week will be very flat.

Exported base oils have been moving back to Europe from Southeast Asia at levels that are much more competitive than before – mid $70s/t has been paid on more than one cargo. Rates from Korea are also lower, with 4,000 tons of easy chemicals being covered in the low $90s/t.

Ample space availability has played a part, but so too has the weak palm oil market where freights have decreased substantially, even into the $40s/t for the very large cargoes from the Straits to Antwerp-Rotterdam-Amsterdam. At the end of the day, lower bunker costs enable such reductions.

The market to the U.S. has also been quieter, with less benzene quoted. Again, there is a good supply of available tonnage, although attempts to ship 24,000 tons of benzene from Korea to U.S. Gulf in the high $20s/t fell on deaf ears. The cargo is still trying to move, but now as 18,000 tons and willing to pay $35/t.

Regional business in India and the Middle East Gulf are okay this week, with steady trade in methanol, MTBE, caustic, styrene, glycol, paraxylene, benzene, ethylene dichloride, pyrolysis gasoline, acids, canola oil and a few possible base oil cargoes. Small clean petroleum cargoes are less evident, however, and the rates for such movements have gone down further. Port congestion in the region has eased greatly.

There have been a number of larger, prompt eastbound shipments this week, as well as some enquiries aimed at substituting material lost due to production issues in some Asian refineries. Rates, however, remain weak.

Westbound rates are soft, with a number of vessels looking to sniff out backhaul cargoes to Europe. Traders have been checking possible benzene cargoes from Yanbu, Saudi Arabia, and a selection of Iranian cargoes has been attempted. However, few owners are able to touch these cargoes, and it will likely take much more time to resolve the issues regarding ship insurance cover.

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 London office SSYs Ian Roberts can be reached atfix@ssychems.comor +44 20 7977 7560 and in Singapore Jordi Maymi at +65 6854 7127.