Commodity prices do not favor the route to the Far East, and even when an arbitrage opens, hypothetically there is not enough product available in the U.S. to ship. Trade has therefore almost ground to a halt for March, yet it is a little early to start looking at April, as most owners have not yet received their contractual allocations to determine how much space they will be left with.

Ethylene dichloride is a prime example, with tentative discussion held, but no deals done. Talk about ethanol into the Philippines has been vaguely aired, but will need more time to conclude. Paraxylene, phenol and cyclohexanone all seem to be workable, and there has been a bit more interest in base oils for April. Rates are looking a little wobbly, however, since the two additional ships that went on berth still seem to have some space.

Core business is running pretty well for the owners on the eastbound service through the transatlantic route, which leaves limited possibilities for taking spot market cargoes, although equally there are not so many of those either.

As with the markets into Asia, Europe is short on certain products such as glycol, methanol and acrylates. But these are in short supply within the U.S. as well. No new base oil activity has been detected this week.

In trade to the Caribbean, the same ships that were open last week are still open, more or less, and they are acting as a brake on freight levels. Unfortunately for them, the Caribbean market has been full of small parcels. With nearly all under 5,000 tons and many less than 2,000 tons, none really appeal to these owners. Even the market into Mexico is tight for prompt loading, but this week most requirements are just 2,000-3,000 tons in size. It is interesting to note that the next delivery of base oils into Punta Cardon, Venezuela, has just loaded from Houston.

Rates appear to have slipped a little on the parcels traffic into Brazil, with mention of 10,000 tons of paraxylene being booked from Houston to Suape in the low- to mid $40s per metric ton for traders. Otherwise, ethanol is largely dominant and the occasional base oil parcel to Brazil.

Base oils are still being quoted by traders from the U.S. into India, but ethanol is the big thing, with something like 50,000 cubic meters already fixed for shipment in the second half of March. Rates are stable.

Europe

The base oil scene from the Baltic is still quite lively for the time of year, when usually domestic demand swings into place and consumes many of the export barrels. The rest of the market in the North Sea and Baltic region is also performing fairly well, and the number of special positions is limited to just a handful of ships, with many owners saying they are covered for the next 10-12 days in advance. Rates are mostly stable, and attempts to secure bargains are mostly rebuffed by owners.

There is not a great deal of prompt space remaining on the usual players who run a service into the Mediterranean, and nor is there much by way of outsiders, or even Mediterranean-based ships that are desperately seeking cargoes into the Mediterranean. Most cargoes, however, are fixed, one way or another, and at levels that are broadly in-line with what has been done recently. A couple of base oil requirements have been noted, along with the usual acrylonitrile, FAME, paraxylene and alkylate cargoes.

On the northbound route, it has been a mixed week with some requirements being put on hold while others have struggled to locate the perfect ship at the perfect rate on the perfect dates. Overall, demand has been pretty decent, which has kept rates stable. Base oils have been noted, but in term supply deals rather than spot sales.

Space is generally tight across the board in the Mediterranean, and several charterers are looking at ships that do not exactly match their requirements, but are close enough on dates and size. Much like last week, rates still show no real upwards track despite this. There are still a number of spot base oil movements, but not to the same intensity as last week.

It has been another week of reasonably strong demand on the transatlantic market, but with all the outsiders that have been tempted on berth now looking for those last few completion cargoes, it does mean that owners have had to show more compromise on freight levels. Rates have more or less stabilized in the low $40s/t for 5,000-ton lots, but it means that there are no opportunities for owners to push for numbers in the $50s/t or $60s/t.

A substantial amount of paraxylene is going across in March, with conservative estimates of 50,000 tons fixed. Pyrolysis gasoline has also been fairly busy, with 10,000-ton lots being in the low- to mid $30s/t region. MTBE in the amount of 20,000 tons from Rotterdam, Amsterdam to Houston paid low- to mid $20s/t, which is lower than other recent fixtures. Other requirements include toluene, vinyl acetate monomer, calcium nitrate and sulphuric acid. Bright stock prices are rather firm in the U.S. and this may trigger some shipments from Europe and Brazil.

March space is almost all gone along the Far East route, but there has not been that much quoted so far for April. Base oils are still perhaps one of the main items, with several enquiries aimed at China and Southeast Asia. Paraxylene in the amount of 5,000 tons from Rotterdam to China is believed to have gone in the mid $80s/t, which sets the benchmark going forwards, although 11,500 tons of base oils from Le Havre, France, to Southeast Asia and China are understood to have cost somewhere in the mid $90s/t, also for March loading.

It has been pretty busy all week into India and the Middle East Gulf, with a range of different products quoted, including base oils. Rates, however, have been dented by an owner reportedly filling out the last tanks on a prompt ship in the $60s/t for 7,000 tons. Another vessel fixed 10,000 tons of ethylene dichloride from Stade, Germany to the west coast of India at around $66/t, which also rather sets the tone, yet other owners who are more familiar with this market still quote rates in the $80s and $90s/t for 5,000-ton parcels.

Asia

Regional chemical demand has not been very resilient in the face of lower commodity values, which in turn has caused end users to back off in the anticipation of obtaining material at even lower numbers. Of course, inventory levels start to register increases, which in turn cause prices to weaken further. Consequently, shipping has been side-lined in some key markets, such as intra-Far East, for instance, where fewer parcels of aromatics have been noted. In spite of this, some routes, such as southbound into Southeast Asia, are reported to be tight on vessel space for the rest of March, which seems slightly illogical since it would be expected that ship owners would want to clear out of the softer intra-Far East market and would therefore market their ships southbound instead. Northbound seems steady, while intra-Southeast Asia routes are somewhat slow currently. Base oil demand still seems to be strong throughout the entire region, however, with quite a few requirements noted.

Freights have started to slip on the transpacific export route with benzene remaining elusive. Some pyrolysis gasoline has been seen instead, and a small lot of MTBE is being quoted from Taiwan to Houston. Rates of $43/t may now be achievable for 5,000-ton parcels from Korea to Houston. The market to Europe, however, is rather busy still, and most owners are just about full for March.

It has been a slighter busier week in terms of new demand in the regional markets, although some of the prompt requirements are certainly caused by ships running late due to lengthy delays in Al Jubail, Saudi Arabia, and being substituted, or even cancelled. A few new base oil shipments have been noted from Iran, as well as the usual cargoes from Al Ruwais, U.A.E., and the Red Sea ports.

Eastbound trade has been sluggish, but rates have held.

Westbound routes have been surprisingly busy and there is not a great deal of March space remaining. There are potential candidates for small lots ,however, but owners are digging their heels in with regards to rates.

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