Last weeks International Petroleum Week event took the wind out of the sails of the European market, while both Asia and the Americas succumbed to holiday fever – Chinese New Year, Carnival and Presidents Day.
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The run of methanol into Asia has eased, but there is still a monumental amount of enquiry left over, looking for either February or March space. Styrene has resurfaced, as has ethylene dichloride and mixed xylenes, and there are still parcels of phenol and ethanol ready to be fixed. Attempts to move base oil have effectively been thwarted by a lack of viable space. Freight rates are notionally unchanged.
Transatlantic eastbound routes continue to be very active. A 5,000-ton cargo of phenol fixed from the U.S. Gulf to Antwerp-Rotterdam-Amsterdam at around $70 per metric ton, with the same ship picking up 3,200 base oils from Houston to Havre, France.
No further base oil shipments have been discernible, however. Instead, there have been cargoes of cumene, cyclohexane, ethanol, tall oil, vegetable oil, biodiesel, acrylonitrile and styrene being quoted. An arbitrage for benzene opened briefly, but soon closed when it became apparent that freight levels would have to be in the $40s/t region.
Scheduled space to India and the Middle East Gulf is almost non-existent for March. Several cargoes of ethanol are being attempted, and one outsider is reported to have gone on berth for 25,000 cubic meters for end of February loading. Rates are in the mid $70s to mid $80s/t for these big slugs. Ethylene dichloride, phenol and base oils are reportedly still under consideration.
Demand for space to the Caribbean remains strong. Very small pockets of space can be found for end of February and first half of March loading. The requirement for 4,300 tons of base oils into Colombia has been mentioned again, but there is supposed to be a fixture on base oils into Rio Haina, Dominican Republic. Cargoes of methanol, ethanol, clean petroleum, caustic, urea ammonia nitrate, mixed xylenes, acrylonitrile and vegetable oil have been noticed this week.
Demand from the east coast of South America has picked up slightly this week, with various grades of chemicals seen. Ethanol, in particular, has been noteworthy. To some extent, base oils have been busy, with a mixture of contractual deliveries taking place, and on the back of them some spot fixtures have been noted.
Aside from the fact that IP Week caused much of the trade to stall in the North Sea and Baltic region, bad weather took its toll too. Some ports in the Biscay area and Northern Spain were closed for over a week. The resulting congestion and port delays caused a number of vessels to be cancelled and prompter alternative ships were needed. The outcome was that some freights were much costlier, but sometimes a cancelled vessel ended up taking another cargo at a substantial discount in order to get moving again. It was a very messy situation. Base oils have been pretty active again out of the Baltic.
Most owners have been fortunate in covering their last prompt bits of southbound space into the Mediterranean. Rates have been mostly competitive though, both into the West Mediterranean as well as into the East Mediterranean. Base oils have been fairly busy with spot deals augmenting contractual ones. Base oils in the amount of 3,000 tons from the Baltic to North Africa paid $75/t, a level that is substantially higher than the usual vegetable oil market from the Baltic to the same ports.
A few more northbound cargoes of aromatics have shown up this week, from Italy and the Black Sea. Base oils are also moving northwards, both on a spot basis as well as term deliveries. Rates have been surprisingly high on some of the movements.
Bad weather and strong swells have also caused the suspension of port operations in a number of Mediterranean locations over the past week. A messy situation similar to the one in northwestern Europe has developed here, too. In the Mediterranean, however, there were some distinct rate reductions applied as owners scrambled to rebuild their forward programs. Base oils have been active, with shipments taking place out of the Black Sea and also some from the Central Mediterranean, mostly into Turkey and North Africa.
Transatlantic westbound traffic has been a little subdued. Aromatics have been discussed, but few traders have been able to get their hands on much material to ship. Caustic has been attempted from both Antwerp-Rotterdam-Amsterdam and Lavera, France, while parcels of cumene, acetone and orthoxylene have been worked from Antwerp-Rotterdam-Amsterdam.
Base oils in the amount of 3,000 tons from Augusta, Italy, to Houston were booked for a rate reported to be at around $115/t. There has been some talk that the cargo was initiated to cover material from another refinery in northwestern Europe that had had suffered an operational incident, but there does not seem to have been much coverage about it, if so.
With so many receivers away celebrating the Lunar New Year, the Far East route was bound to be quiet. All the same, most of the February carriers seem to have filled up their last tanks, or those couple of ships that did sail with space were under time duress and had little time to pick up cargoes on the way. Traders continue to talk about base oils to Singapore or China, but nothing has been heard fixed so far. Rates are notionally unchanged.
Base oils are one of the many commodities being studied by charterers on the route to India and the Middle East Gulf. Other products include ethylene dichloride, styrene, acrylonitrile, mixed xylenes, hexane, toluene, oxo-alcohols, solvent naphtha C9 and vegetable oil. There is not a great deal of prompt space available and consequently rates are fairly firm.
Even now, the domestic Asia market has still to return to normal after the holiday period. Nevertheless, inter-Far East routes have been surprisingly busy and the majority of owners are covered through until March. Base oil activity has been pretty decent, considering the circumstances. Some of the other regional routes have been less encouraging, such as intra-Southeast Asia, where demand has been soft in general. Northbound routes have still to reactivate too, and a number of prompt ships still have space. Rates out of Singapore have slipped as a result, with 3,000-ton parcels from Singapore to mid China costing around $43/t-$45/t.
The benzene arbitrage remains closed on export routes into the U.S. It transpires that even the 18,000 tons reportedly fixed last week from Korea to the U.S. Gulf, in the low $40s/t, did not actually happen.
It is still early days after the holiday, but not much has been quoted to the U.S. Business is also slow to Europe, but it has to be noted that there are not a great deal of ships actually on berth with space. There are undoubtedly a lot of ships fully open in Asia but until they are convinced that there is an adequate supply of cargoes they will hold back. Rates are still mid $70s/t for 5,000-ton parcels of base oil from Southeast Asia to Antwerp-Rotterdam-Amsterdam.
Trades in the India and Middle East Gulf region have been reasonably active, with a number of cargoes still unfixed after several weeks of searching. It is clearly a question of freight ideas, and owners see just enough business around for them to avoid accepting charterers ideas for the moment. Base oils in the amount of 2,500 tons from Iran to the west coast of India are reported to have gone in the mid $40s/t, which is quite a low figure, but there a lot of small, older ships that are happy enough to while away their twilight years in a market where vetting is not a primary concern.
Eastbound demand has been steady this past week, with a number of traders chasing larger lots of methanol to Asia. Cargoes of paraxylene, orthoxylene, styrene, MTBE and canola oil have also been quoted.
There has been a reasonable variety of westbound cargoes looking to move to Europe from India and the Middle East Gulf, including products such as benzene, acetone, methanol, styrene and vinyl acetate monomer. The market from Iran is beginning to attract more interest too, especially following news that U.S.-based re-insurers are willing to underwrite business for non-U.S. companies, and several traders are starting to look to see how much base oil freights would be.
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 firstname.lastname@example.org by phone at +44 12 0750 7507. In the London office SSYs Ian Roberts can be reached email@example.com +44 20 7977 7560 and in Singapore Jordi Maymi at +65 6854 7127.