SSY Base Oil Shipping Report

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There has been a bit more activity in the United States, and European markets are generally performing well. Asia, however, is still having to deal with a reduction in demand and overcapacity of ships on some routes.

U.S. Gulf

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The first styrene cargo for several months has been quoted on the U.S. Gulf to Far East route as U.S. refineries come back on-stream, rapidly followed by further similar requests. Traders are also taking a look at paraxylene and mixed xylenes while ethylene dichloride continues to be seen, with at least two cargoes of 10,000 tons already booked for April. Several ethanol requirements are going around, and following a couple of phenol fixtures further phenol enquiries have been noted too. An enquiry to ship 9,000 tons of base oils from Houston, U.S. to Singapore is believed to have been covered on a ship that is heading out via South Africa rather than via Panama.

Owners report seeing more eastbound business along the transatlantic route this week. Rates are also a touch firmer. Mixed xylenes in the amount of 5,000 tons from Texas City, U.S. to Antwerp was covered at $53 per metric ton for example. There are enquiries to move phenol, cyclohexane, cumene and glycols, as well as the usual 15,000 tons of technical corn oil and some ethylbenzene. Other cargoes include ethanol and biodiesel, but there is really very little spot interest in base oils.

Activity levels have been boosted on the U.S. Gulf to Caribbean market too. A couple of new tenders are around for sulphuric acid and glycols. Caustic in the amount of 6,500 tons was booked from Point Comfort, U.S., Rio Haina, Dominican Republic, and Point Lisas, Trinidad and Tobago, in the low $40s per metric ton. The base oil requirements to Rio Haina and Cartagena, Columbia, are lingering without much decisive action so far, and there is a small lot of TFO from Curacao to Altamira, Mexico, and Cartagena. A tender for 24,000 tons of base oils in two shipments was issued by buyers in Punta Cardon, Venezuela, but it is unclear how much, if any of this, can be sourced from the U.S. Gulf.

The U.S. Gulf to the east coast of South America is one of the quieter routes in the Americas. There is still some interest in shipping sulphuric acid, urea ammonia nitrate and some ethanol, but volumes are not strong enough to cause any change in freight levels. A small enquiry for base oils into Brazil was circulated and should have been easy to cover.

Firm demand has been patchy along the U.S. Gulf to India and the Middle East Gulf route. Ethylene dichloride traders are complaining that they are losing market share to European suppliers, while the phenol stems that had been offered to India were sold to other destinations instead. A large lot of ethanol was booked to India for $1.6 million to $1.7 million, but it was a full cargo on a medium range, and left no room for any of the base oil enquiries that are still under discussion.

Europe

It is very obvious that the switch to summer grades of gasoline is starting in earnest, because the North Sea and Baltic route is full of cargoes such as biodiesel and ethanol, to the extent that around 75 percent of all spot business is somehow related to gasoline-blending. Base oils have not had much of a look in. There have been two to three cargoes from the Baltic to Continental Europe and another to the west coast of the UK, with several routine shipments along the coast by oil majors. Rates are mostly competitive due to the number of prompt positions that have been in the area.

There was a pause in the amount of enquiry in the market along the southbound route during the final week of March, probably attributable to attendance at American Fuel & Petrochemical Manufacturers event in San Antonio by the trading fraternity, but this was enough to spur owners into fixing their ships at slightly lower numbers. Easy chemicals in the amount of 5,000 tons from Rotterdam, Netherlands to the East Mediterranean were fixed in the high $40s/t, while 6,000 tons of paraxylene from Rotterdam to Iskenderun, Turkey achieved $42/t, both levels being slightly lower than the previous shipments. Cargo volumes are starting to build again, but owners may still be tempted to fix now, confident in the knowledge that their vessels are fixed well into April.

Space is still tight along the northbound route and a number of cargoes are difficult to cover as a result. There is quite an array of requirements in the market, including toluene, fatty acid methyl ester, glycerine, vegetable oil, benzene, C7, pyrolysis gasoline, ETBE, phosphoric acid and mixed xylenes. Base oils in the amount of 9,000 tons were quoted from Kavkaz, Russia to Rotterdam.

There has been a veritable deluge of biodiesel requirements in the Mediterranean this week, mostly in and around Spain, Portugal, France and Italy, but there was also a fixture from Varna, Bulgaria to France as well. Surprisingly, there are a couple of prompt ships still available in the West Mediterranean. Space is tight in the East Mediterranean and Black Sea, with vegetable oil numbers really taking off – 12,000 tons of vegetable oil was booked from the Black Sea to Turkey in the mid $20s/t for example, and another 6,000 tons to Spain achieved $46/t-$47/t, which is higher than some chemicals pay. Base oils have been active with a number of fixtures into Turkey and North Africa. There would probably be even more base oils were supplies in the Mediterranean a little more plentiful because there have been base oil tenders that have been deferred through a lack of offers.

Increased demand for toluene and xylene has been reported this week through the transatlantic route, and there has been some talk of benzene, though this has yet to materialize. Paraxylene continues to be booked, and there is still some sulphuric acid, calcium nitrate, urea ammonia nitrate plus the occasional small parcel of base oil quoted. Rates have sagged a little, with 5,000 tons of aromatics from Rotterdam to Mexico reportedly booked at around $43/t as a completion cargo on a ship is already heading in that direction. One of the toluene cargoes was worked to Houston in the high $30s/t on the basis of 5,000 tons.

Traders are starting to explore large lots of mixed xylenes from Europe to the Far East, as well as toluene and styrene. Pyrolysis gasoline in the amount of 6,000 tons was attempted from Constanza, Dominican Republic, to China, and some adiponitrile has been booked for April, with further demand for adiponitrile noted for May loading. Base oils, however, are less visible, with the main requirements being for oil majors rather than for traders. Rates appear to be stable.

There is still plenty of demand along the Europe to India and the Middle East Gulf route. A couple of phosphoric acid cargoes from North Africa continue to seek out space. Vegetable oils are particularly active from the Black Sea, and there are parcels of aromatics and solvents out of the Mediterranean and Continent. Small parcels of base oils have been noted, as well as some slightly larger cargoes into the Middle East Gulf. Rates are mostly unchanged.

Asia

Generally speaking, there has been less activity along the domestic Asia route. It may partly be an inventory issue, and buyers may be holding off to achieve the lowest prices, but some commodities have begun to rebound with prices increasing. This might incentivise buyers, but there is also a public holiday looming in China that may stall things a while longer. Some styrene traders are still looking to re-export styrene inventory back out of China to Korea, but this week also saw some fresh requirements for styrene to ship back into China from Korea. Base oils have been sluggish throughout Asia, and volumes miniscule in some cases.

Space is still tight on the transpacific route, chiefly because some owners dont fancy parcelling up, while others have dropped a couple of sailings this month, and another is even believed to have unofficially withdrawn from the service. Benzene is still on a back-burner. A large lot of paraxylene was fixed to Mexico however. Vinyl acetate monomer in the amount of 6,000 tons from Singapore to Houston achieved a rate in the low- to mid $90s/t. Solvents in the amount of 2,000 tons from Singapore to Houston were covered in the mid $120s/t and there have been several parcels of acetone worked into the U.S. Gulf. The market to Europe is also tight on space. A requirement for 10,000 tons of acetic acid from Singapore to Antwerp eventually had to be split onto two ships as nobody could take the full 10,000 tons. Those cargoes paid in the low or mid $90s/t. Easy chemicals in the amount of 2,000 tons from Korea to the West Mediterranean fixed at $110/t. There are plenty of smaller parcels of acetates, acrylates, vinyl acetate monomer, aniline and acrylonitrile, as well as some large lots of biodiesel. There are, however, some owners who are willing to remain very competitive if they consider the business suits. Biodiesel in the amount of 4,000 tons from Xiamen, China to Rotterdam for example paid $60/t, while 7,000 tons of base oils from Malacca, Malaysia, to Antwerp were heard worked in the $50s/t.

The chemicals and parcels market along the India and the Middle East Gulf route is generally subdued in the regional markets. Eastbound has not been busy either and the same can be said of westbound routes.

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.

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