The shipping market worldwide – producers, traders, ship owners and brokers – will be happy to shrug off the last couple of months, when a steady string of public holidays repeatedly interrupted trade. With no major ones in sight, apart from Ramadan, it is hoped that business will start to pick up through June.
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As predicted last week, the route into the Far East is now a lot tighter on vessel space, with almost all scheduled June space spoken for. There are a couple of fully open ships still available, but there are various alternatives to take, and they do not have to go to Asia. It is conceivable, therefore, that rates will rebound shortly.
It could be termed a hollow victory for owners, but in reality, the owners did nothing to bring this about, and instead it was pure demand. Styrene has been a major product, with one fixture alone of 25,000 tons believed to be fixed into Asia. Ethylene dichloride, ethanol, paraxylene, phenol and even some base oils have been among some of the grades noted.
The fact that Asia has become a potential target for some of the ships that are fully open in the U.S. Gulf could ease the pressure on transatlantic eastbound routes. There has never been a significant overhang of space on this route, and with fewer outsiders around, there may be a slight recovery in this trade lane too.
The route has also been assisted by the substantial amount of palm oil that has already been fixed and is still to be fixed from the Caribbean and the west coast of Central America to Europe. The clean petroleum market has been stronger too, taking away some of the simple, medium-range type tankers. Styrene, cumene, ethanol, lysine, biodiesel, acrylonitrile, paraxylene, vinyl acetate monomer and ethylene dichloride are there to be fixed, but no base oils to Europe. The only deep-sea base oil fixture was for 12,000 tons from Paulsboro, U.S., to Lagos, Nigeria.
Some have deemed the Caribbean quiet, and, whilst still a long way from being busy, most ships are finding employment. Cargoes of methanol, ethanol, caustic, urea ammonia nitrate, vegetable oil and acid have been noted. Base oils in the amount of 1,500 tons were booked from Curacao to Altamira, Mexico, and 2,500 tons of base oils were covered from the U.S. Gulf to Cartagena, Colombia, seemingly in the upper $50s per metric ton. Base oils in the amount of 1,500 tons were quoted from Port Arthur, U.S., to Rio Haina, Dominican Republic, for the first half of June as well.
A teeny bit of extra material is helping cover the scheduled vessels from the U.S. Gulf to the east coast of South America, and there is now not a lot of open space around. Ethanol is still a hot item, with more ships being booked with it into Brazil. There have been rumors of 10,000 tons of styrene to Manaus, and 11,500 tons of caustic was fixed into Brazil. Methanol in the amount of 20,000 tons was quoted from Jose, Venezuela, to the east coast of South America, and there is a large cargo of urea ammonia nitrate to be moved. Base oils in the amount of 3,500 tons came out looking for space in mid-July from Houston, U.S., to Rio de Janeiro, Brazil.
Ethanol and ethylene dichloride still top the list of requirements into India and the Middle East Gulf, but base oils have faded due to the tight supply situation in the U.S. Rates have fallen too, with mid $60s/t easily possible for 5,000-ton parcels from Houston to Mumbai, India, and maybe even lower levels are achievable.
The Pentecost holiday throughout most of Europe only served to reduce trade further along the North Sea and Baltic route, but since then there has been a reasonable stream of enquiries. Some ships will be open within a day or so, but the bulk of the fleet has a few more days grace. Base oils have been fairly busy out of the Baltic again.
Trade is a bit thin presently in the chemicals sector, and there is space left to fill along the southbound route. A couple of base oil parcels are being attempted by traders from the Baltic to North Africa and Israel.
The northbound route is also somewhat subdued presently. Pyrolysis gasoline and benzene have been worked from the Black Sea and a large cargo of methanol was booked from Damietta, Egypt. Base oils in the amount of 10,000 to 11,000 tons from Kavkaz, Russia, to Rotterdam, Netherlands, are said to have been fixed on a ship that ballasted all the way up from Nigeria.
There is not a lot of prompt space in the inter-Mediterranean route, but where a cargo may fit an owners program they will go in with very competitive levels. Methyl tertiarybutyl ether in the amount of 3,000 tons from Fos, France, to Venice, Italy, for example, went for around 108,000-110,000, when most of the competitors were indicating 130,000-160,000.
The Black Sea has become an interesting region, with several large methanol cargoes booked from Kulevi, Georgia, and several small ones fixed out of Kuelvi and Temryuk, Russia. Cargoes of acrylonitrile, benzene, styrene, hexane, acrylates, vinyl acetate monomer, caustic and vegetable oil have also been covered out from the Black Sea. A new and unusual requirement has been for 5,000 tons of methyl tertiarybutyl ether from Kavkaz to Chernomosrk, Ukraine, or Haifa, Israel. Base oil has not featured out of the Black Sea, but there has been some cross-Mediterranean movement.
There have been precious few westbound, transatlantic cargoes in the market this week. Since there are a bunch of ships already on berth with space it would seem likely that rates could drop further. Talk is that 5,000-ton cargoes from Rotterdam to Houston will now fetch $30/t-$35/t, which is quite a drop from the high $30s, low $40s of a month ago. Base oils are represented through enquiries to Punta Cardon, Venezuela, and Cuba from Continental Europe, and to Houston from Livorno, Italy.
It might not be unduly hectic on the route to Asia, but nor is there much spare space for June loading. There is talk of 5,000 to 15,000 tons of paraxylene from Rotterdam to the Far East that might entice an outsider, and there is around 6,000 tons of acetone and phenol being attempted to the Yangtze River, China. Hydrocracker bottoms have been one of the major items, with at least three ships fixed this month.
There have been so many outsiders that went on berth in June that rates have come under a lot of downwards pressure into India and the Middle East Gulf. It is mainly small parcels of aromatics, acrylonitrile, hexane, linear alkyl benzene, paraffins and solvents that have been pulling them in rather than base oils. Vegetable oil is still active out of the Black Sea, but the next lifting of 19,000 tons of phosphoric acid from Tunisia to Kakinada, India, is apparently being readied, and already owners are talking of levels under $40/t.
Rates throughout most of the Asian routes have not actually changed much over the past week or two, but for many owners, the bottom has been reached and it is better to walk away rather than fix with any further reduction. Indeed, ships are ballasting more frequently. Many of the smaller vessels of around 3,000 to 5,000 dwt have a reasonable forwards program, but the larger ships are finding few cargoes to suit them. A relatively rare 10,000 tons of paraxylene from Kerteh, Malaysia, to south China is reported to have gone in the mid $20s/t, for example. Base oils have been active within Asia, with movements in most directions, and with shipments back to the usual 2,000 to 3,000 tons.
The picture on the transpacific east route is broadly the same. Benzene is getting done to the U.S., albeit quietly, and there is talk of some large lots of paraxylene and alkylate. Sulphuric acid is a little more common, too.
The market into Europe has recorded slightly firmer levels thanks to improved demand. Base oils in the amount of 4,000 tons from Korea to Antwerp, Belgium, are reported to have gone for $88/t, for instance. The usual 6,500 tons of base oils are looking to ship from Malacca, Malaysia, to Antwerp, but there have also been traders looking to ship base oils to Greece and Haifa, probably to take advantage of the cheaper bright stock levels in Asia.
There has been a little more activity within the India and Middle East Gulf region, but volumes are not yet up to what would be considered normal levels. Base oils from Iran and Al Ruwais, U.A.E., are notable in this area, as well as some enquiries from Yanbu, Saudi Arabia, and Jeddah, Saudi Arabia. The impression is that there are not quite as many ships open in the region due to a reduction in imports, and so owners are perhaps able to squeeze slightly higher levels.
Eastbound rates, for example, reveal increases from some of the fixtures being reported. Westbound is stable and most of the outsiders have gone. In terms of base oil, the impact from the Arab nations boycott of Qatar should not have major repercussions since most of the ships that load the gas-to-liquids base oil do not often call at other ports in the region after sailing from Qatar, but there might be some disruption to base oils that transit the U.A.E. or originate out of other ports in the region.
Adrian Brown is a senior market analyst for chemicals and base oils with SSY Shipbrokers, London, can be reached email@example.com +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.