SSY Base Oil Shipping Report


Negativity pervades the global shipping market, especially the deep-sea routes, and while such sentiment is completely justified in some areas, its less so in others.

U.S. Gulf

Activity has picked up into Asia, and the all the remaining June space has gone. Owners are starting to ask for higher freight levels. For example, 5,000 tons of aromatics from Houston, United States to Ulsan, Korea, are offered at $56 per metric ton, compared to a couple of weeks ago when rates were in the mid $40s per ton from every owner. There are still a couple of scheduled players who could be convinced to accept high $40s/t, and it may be possible at this stage to achieve something for July in the $46-$47/t region. Base oils in the amount of 7,000 tons were booked from the U.S. Gulf to Singapore, but the main thrust has been styrene, paraxylene, ethylene dichloride, ethylbenzene, phenol, ethanol, acrylonitrile and glycol.

There is some life in the eastbound market, but it is tentative, and owners are still wary of pushing too hard. Scheduled carriers are filling well with contractual volumes, causing rates for spot opportunities to remain in the mid- to high-$40s/t for 5,000-ton parcels from Houston to Rotterdam, Netherlands. There are still some prompt ships around in the U.S. Gulf that are not tied to any single direction, but there has been a subtle shift and rather than being seen as vulnerable and therefore dragging rates downwards, these positions are seeing a few more cargo opportunities which eventually might cause rates to swing upwards. Chemicals in the amount of 1,000 tons from Mississippi, U.S., to Rotterdam are fixed in the low $80s/t. There are no base oils, but there have been cargoes of cumene, vinyl acetate monomer, ethanol, biodiesel, fish oil, lysine, glycols, nonene, jet propellant 8, urea ammonia nitrate and caustic.

The market into the Caribbean is not too busy on the small parcels trade. There are a couple of caustic tenders outstanding, and there have been glycols, acid, tallow, palm oil and some small clean petroleum requirements, but base oils are less visible this week.

June space along the route into the east coast of South America seems to have been absorbed, with yet more ethanol reported to be moving. There is space available in July, however.

Ethylene dichloride has been one of the primary grades that have shipped into India, with estimates of around 100,000 tons in total booked over the past few months. Ethanol continues to be fixed too, but base oils are on a back-burner.


There has been a steady volume of business in the North Sea and Baltic route, and the majority of vessels have at least one or two cargoes in hand. However, the feeling among owners is that it is still a highly competitive environment, with most cargo requirements receiving a lot of attention and owners having to be aggressive on their rate ideas. Several base oil shipments were booked out of the Baltic over the past week, but the number of new requirements is thin.

It has not been particularly busy on along the southbound route over the past week, and some owners have been booking cargoes that they would not normally look at. Several have ventured up into the Baltic, fixing cargoes of acrylonitrile, caustic, lignosulphonate and paraxylene into the Mediterranean. There has also been some base oils fixed from Liepaja, Latvia and Le Havre, France, to Oran, Algeria.

Owners report that contractual demand is still decent northbound from the West Mediterranean, and some of the rates agreed on spot voyages have been at unchanged levels, such as 6,000 tons of pyrolysis gasoline from the Adriatic Sea to Antwerp-Rotterdam-Amsterdam in the low 40s/t. Pyrolysis gasoline in the amount of 6,000 tons was fixed from Kulevi, Georgia, to Rotterdam, and another vessel took 17,000 tons of methanol from Kulevi to Koper, Slovenia and Antwerp-Rotterdam-Amsterdam. The 11,000 tons of base oils from Kavkaz, Russia to Antwerp-Rotterdam-Amsterdam were indeed fixed, not on the ship that ballasted up from Nigeria, but on another vessel that had been trading clean petroleum in the local area.

With less fatty acid methyl ester being transacted in the Mediterranean this week, owners have been hunting around for alternative business, which in the West Mediterranean has not been so easy. In the Black Sea and East Mediterranean, however, there has been a steady flow of methanol, acetates, acetic acid, sulphuric acid, acrylonitrile, styrene, ethanol, hexane, phosphoric acid, vegetable oil and more recently, methyl tertiarybutyl ether, which has kept most ships occupied in the area. Base oils have been fixed into Turkey, Egypt and Tunisia, the latter cargo paying 27/t for 2,500 tons from Livorno, Italy.

There is too much tonnage on the transatlantic westbound route and insufficient cargo, causing rates to drop even further. Rates for 5,000-ton parcels are ostensibly in the $30-35/t region, but for a firm cargo it might be possible to undercut these levels. Paraxylene in the amount of 5,000 tons from Rotterdam to the east coast of Mexico is believed to have been worked in the mid $30s/t. A large lot of base oils were covered from Rotterdam to Punta Cardon, Venezuela, but there is still uncertainty as to what has happened into Cuba.

Rates have not really moved much at all into Asia, predominately because there is nothing of any great size that non-scheduled vessels can use as a base cargo. The route is, therefore, a preserve of the scheduled ships, and these have been able to pick off the smaller cargoes at significant levels. There has been more base oil into Singapore, and some process oils were booked from Hamburg, Germany into Asia.

Demand remains strong into India and the Middle East Gulf, except that many requirements are small and, with plenty of ships on berth, the rate that small parcels achieve is quite low. Larger lots, such as the phosphoric acid and vegetable oil, attract even more hostile bidding. Base oil demand has been rather thin.


Among domestic Asia routes, space is tighter for June on several routes, such as intra-Northeast Asia, where smaller ships are now mostly employed for June. Base oils in the amount of 5,500 tons from Korea to China are said to have been fixed in the mid $20s/t, involving several discharge ports. On the other hand, 6,000 tons of aromatics from Korea to mid China are fixed at $16.50/t basis one to one. Base oils have been more widespread out of Korea this week, with 2,000 tons fixed from China to Singapore. The intra-Southeast Asian market, however, has insufficient business to support all the open vessels, and rates have become highly competitive.

On export routes from Asia, a wider range of commodities is being seen on the transpacific east route, such as benzene, pyrolysis gasoline, paraxylene and cumene, in addition to small parcels of methylene diphenyl diisocyanate, 2-ethylhexanol, butyl acrylate and aniline. Space remains scarce this month, and owners are looking to achieve high $40s/t for 5,000-ton parcels into Houston. The market to Europe is fairly stable from Northeast Asia, as space is less readily available than from the Southeast Asia region, where several palm oil carriers can offer competitive completion space. Base oils in the amount of 6,500 tons from Malacca, Malaysia, to Antwerp, Belgium are said to have gone in the low $60s/t.

Along the route into India and Middle East Gulf, the political situation with Qatar and its neighbours is still causing uncertainty in the regional markets, yet business endures. There has been a steady flow of base oils, clean petroleum, glycols, pyrolysis gasoline, benzene, paraxylene, methanol, caustic, acids, methyl tertiarybutyl ether and vegetable oil. Eastbound space is tight for small parcels, but is readily available for larger lots. Rates, however, seem to be a touch firmer, with owners working 6,000-ton parcels into Southeast Asia in the mid- to high $30s/t. Westbound sees many smaller parcels into the Mediterranean and Antwerp-Rotterdam-Amsterdam, with an occasional 5,000 to 10,000 tons parcel. Several ships are seeking completion cargoes, which should keep rates in check.

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 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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