Commodity prices are extremely volatile at the moment along the U.S. Gulf to Far East route, making any sales or purchasing decisions potentially risky. The drop in crude oil prices, coupled with a short-term oversupply of many commodities within Asia, has sparked a worldwide decline in demand. But it really is fast and furious stuff and changes to the dynamics are happening constantly. For example, styrene continues to see downwards pressure and no shipping interest from the U.S. Gulf, whereas methanol saw some strange price fluctuations and prices eventually rebound.

Normally, the U.S. would expect to ship methanol to China, but such was the chaotic pricing scenario that for a while there were examples of methanol fixtures from China back to the U.S. Gulf, which is practically unheard of. The moment seems to have passed and such moves are becoming less likely. Other aromatics such as paraxylene and mixed xylenes have been discussed, and there is strong interest in phenol. Base oils continue to be probed, with mention of a cargo being booked from Paulsboro, U.S. Majors are also looking to move base oils to Asia.

Prior to the American Fuel & Petrochemical Manufacturers event in San Antonio, there was a spike in eastbound demand through the transatlantic route that saw several cargoes of glycol fixed, as well as phenol and acetone. Cumene was also looking to ship, and there was an unusual sulphuric acid requirement from Savannah, U.S. to Morocco. There has not been much evidence of base oil activity, however.

Up until a few days before the traders all departed for San Antonio, U.S., business was pretty decent along the U.S. Gulf to Caribbean route, with a range of commodities quoted, including base oils, but most of it went onto the back-burner for the duration of the event. If trade settles back down into a routine again, there should be possibilities to ship methanol, ethanol, caustic, glycols, urea ammonia nitrate, tallow and vegetable oil. Details should emerge too on the status of the base oil requirements into Rio Haina, Dominican Republic, and Cartagena, Colombia.

It is still rather slow on the southbound market into the east coast of South America. No new base oils activity has been detected and only the occasional cargo of ethylene dichloride, ethanol, paraxylene and urea ammonia nitrate has been discussed.

Fewer opportunities to move base oils to India have been reported this week. Ethanol has also grown quieter. Traders continue to look at ethylene dichloride, but the competition provided by European sellers is strong. Better progress may be made once everyone is back to their desks, but right now the route into India and the Middle East is quiet.

Europe

Overall, it has been a little quieter on the North Sea and Baltic routes, and a few more prompt open positions have popped up. Base oils have been very calm, with hardly any developments out of the Baltic.

There is not a great deal of space into the Mediterranean, and this has resulted in some slightly firmer levels being reported. An enquiry for 6,000 tons of pyrolysis gasoline from Dunkirk, France, to Priolo, Italy, only attracted two offers. The cargo was booked at 34 per metric ton, but the other offer was at a significantly higher level. Demand is varied, with cargoes of ethylene dichloride, ethylbenzene, pyrolysis gasoline and paraxylene having been covered, and further enquiries of ethylene dichloride, FAME, acrylonitrile, base oils and acetates noted.

Rates remain firm, reflecting the tighter tonnage situation in the Mediterranean along the northbound route these days. Glycerine in the amount of 3,500 tons from Spain to Antwerp-Rotterdam-Amsterdam was heard fixed in the mid $40s/t. A cargo totalling 6,000 tons of aromatics from the west coast of Italy to Antwerp-Rotterdam-Amsterdam obtained 33/t-34/t. More benzene, pyrolysis gasoline, alkylate, caustic and FAME has been noted.

In spite of what is widely acknowledged as a tight space situation within the inter-Mediterranean route, rates have not really increased, suggesting that owners care more about fixing their ships ahead than wrestling with charterers to secure marginal increases on the freight. FAME has been very busy within the western Mediterranean region, and the clean petroleum market has also been more active. There is some base oils traffic into the eastern Mediterranean and Turkey.

Paraxylene has probably been the most active commodity westbound, with requirements noted from Aliaga, Turkey, Antwerp-Rotterdam-Amsterdam and Kotka, Finland. Generally though, trade has been slow, although rates are mostly stable. Base oils have been generally absent from the transatlantic route.

Not much has occurred on the market into Asia. Traders have been checking to see if the arbitrage is there for paraxylene, but most other products are on hold until after the annual AFPM meeting.

Demand is reasonably buoyant along the India and Middle East Gulf routes. A 7,000-ton cargo of easy chemicals from Rotterdam to the west coast of India ended up in the mid $70s/t, having earlier failed subjects on another vessel in the $60s/t. Base oils have been observed, and it would appear that cargoes have been fixed into Karachi, Pakistan, and Jebel Ali, United Arab Emirates. Cargoes of phosphoric acid, hexane, acetone, and acrylonitrile have also been noted.

Asia

Weaker commodity prices have been making it harder for sellers to convince buyers to accept product right now, and this process has caused more owners to find themselves left with prompt open tonnage. All the main trading routes within the Asian coastal markets are similarly affected. Having said that, there have been a number of cargoes that were first quoted a couple of weeks back and which have still to be covered, maybe more because charterers expectations were lower than most owners could stomach. Base oil activity has been patchy, with most requirements being small. Some larger base oil volumes have been detected from Singapore, but are probably contractual volumes that have been directed onto the spot market instead.

Earlier in the week there were enquiries for methanol on the transpacific east export route, but those will probably fizzle. Some traders were looking at benzene, which might firm up if the price of benzene continues to strengthen in the U.S. An isopropanol haul of 1,000 tons was booked from Ulsan, South Korea, to Savannah, U.S., in the $150s/t, giving a taste of what parcels rates are.

Cargoes of MTBE, aniline, caustic potash and urea ammonia nitrate have also been seen into the U.S. The market into Europe has been busier and the space situation is tighter. Two-thousand tons of orthoxylene are fixed from Ulsan, South Korea, to Genoa, Italy, and there has been mention of acetates, acrylates and aniline. Rates are mostly stable throughout, awaiting developments after the AFPM meeting.

Small parcels of clean petroleum have provided the majority of spot interest on regional markets this week along the India and Middle East Gulf routes. Base oils have been reasonably busy too, with rates in the mid $40s/t mentioned on a cargo of 8,000 tons from the Red Sea into the United Arab Emirates.

Eastbound has seen some larger chemicals parcels from Al Jubail, Saudi Arabia, and Mesaieed, Qatar, but less activity from Iran due to the New Year celebrations there.

Westbound, traders have been checking rates on base oils from Iran into Turkey and potentially into West Africa, and there is still some wax from Iran into Italy. Traders are looking at parcels of benzene, methanol and glycol to Europe. Several ships are on berth into the Mediterranean and can accommodate small parcels as completion, probably at very competitive terms.

Adrian Brown is a senior market analyst for chemicals and base oils with SSY Shipbrokers, London, can be reached atfix@ssychems.comor +44 12 0750 7507. Information about SSY can be found atwww.ssyonline.com. In the Houston office,Steve Rosenthalof SSY’s Chemical Tanker Department can be reached directly at +1 (713) 652-2700 and Jordi Maymi in Singapore can be reached at +65 6854-7127.