SSY Base Oil Shipping Report

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The U.S. market is on a more even keel, with a few routes even showing strength. European short-sea business has been active, but deep-sea has been slow. Asia is mixed, with some routes up and others down.

U.S. Gulf

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Rates to the Far East continue to trend upwards on the back of healthy demand and a limited number of July positions in the U.S. Gulf. Styrene is again leading the charge. Traders have been attempting to keep rates under $50 per metric ton for 5,000-ton parcels, but owners are pressing for small increases. In their favor is that demand is varied right now, and there have been fixtures of ethanol, ethylene dichloride, phenol and paraxylene.

Butanols amounting 5,000 tons were heard fixed at $53/t and 26,000 tons of lard/technical corn oil from the U.S. Gulf to Singapore paid rates in the mid- to high $60s/t.

Space is much tighter for the first half of July on the eastbound transatlantic route. Cumene totalling 5,000 tons from Houston to Antwerp-Rotterdam-Amsterdam filled one of the last positions, seemingly for rates in the mid- to high $40s/t. But as soon as this cargo was booked, the next cumene cargo, and the one after that were put on the market, ideally looking to load mid-July.

Several parcels of styrene are known to have fixed. A large cargo of vinyl acetate monomer was covered from Houston to Antwerp-Rotterdam-Amsterdam. Several traders are looking to fix benzene to Europe, following a styrene plant outage that has suddenly created a surplus quantity of feedstock benzene. Several cargoes of ethylbenzene were quoted.

Caustic in the amount of 15,000 tons is looking for a July ship into the Mediterranean. Several parcels of phenol have been seen into Antwerp-Rotterdam-Amsterdam and several small lots of base oil have been quoted from Paulsboro, U.S., and the U.S. Gulf into Antwerp-Rotterdam-Amsterdam. Base oils, 11,000 tons of which, were fixed from the U.S. Gulf to Lagos, Nigeria, and a further cargo of 5,000-7,000 tons of base oil has been quoted from Paulsboro to Lagos for late July.

A little more spot activity has been recorded in the U.S. Gulf to Caribbean, yet in spite of this there are a couple of ships that remain open and still able to load this week. This has had the effect of choking off any potential freight increases. Caustic remains one of the main commodities in the area, along with palm oil. Base oils have been slow, apart from a parcel of 1,800 tons that was fixed into Colombia.

Ethanol continues to pour into Brazil, limiting the amount of open space. However, there is not a great deal else. Traders did look at some paraxylene into Brazil, but European suppliers took that business. Styrene is expected to ship for delivery in August, but nothing has been booked so far. Small parcels of base oil are apparently under discussion, but again, nothing has yet come to fruition.

The tight supply situation on base oils in the U.S. is rather limiting the amount of action on trade to India and the Middle East Gulf. There is space available too, with only ethylene dichloride, ethanol and acetic acid mentioned.

Europe

The new month brought about a surge in cargo requirements in the North Sea and Baltic Sea regions, with many of them being much larger than normal. Indeed, some are even twice the usual size, which would suggest that buyers and end users are stocking up while commodity prices are attractive, following lower crude and feedstock values. The concern for owners is that there will be no further need for purchases later in the month while the plants and factories enter the usual holiday season during which time output is reduced. The range and scope of commodities quoted is impressive, though. Base oils are well-represented in all of this, with movements into and out of the Baltic, as well as along the European coast.

Southbound owners have noticed a slight increase in demand into countries such as Turkey, following the end of the Ramadan period. Base oils have been quoted into Morocco from Leixoes, Portugal, but only for loading in August. Caustic and ethylene dichloride is also looking to ship into Morocco. Again, the breadth of demand is encouraging, with not just FAME moving, but paraxylene, styrene, orthoxylene, ethanol, MTBE, acetic acid, acrylonitrile, ligno sulphonate, normal paraffins and methanol. Rates are much the same as usual. For example, 5,000 tons of easy chemicals to two ports in the Antwerp-Rotterdam-Amsterdam region to the Spanish Mediterranean paid $32/t, while 3,000 tons of MTBE from Antwerp-Rotterdam-Amsterdam to southern Spain fetched 35/t, for example.

Aromatics seem to dominate northbound movements. Volumes are considered normal, sustaining current rates. Chemicals amounting to 3,800 tons from two ports in southern Spain to Antwerp-Rotterdam-Amsterdam paid $37/t, for example. Benzene, pyrolysis gasoline, mixed xylenes and toluene are among the grades fixed.

Cross-Mediterranean demand has been pretty steady. There are not many idle ships, and a few owners have managed to schedule their ships right the way through into August. Base oils feature into Morocco, Turkey and Israel. FAME activity has cranked up and accounts for much of the open tonnage in the West Mediterranean, with the occasional shipment from Varna, Bulgaria, noted too.

The mood remains somber on the westbound route, with too many ships chasing too few cargoes. The latest 5,000-ton cargo of paraxylene from Rotterdam to the U.S. Atlantic Coast was booked at $26/t-$27/t, but there were a couple of shipments of pyrolysis gasoline and MTBE that collected $30/t. More base oils have been seen looking to ship to Cuba in July. Ten thousand tons of hydrocracker bottoms from Flushing, Netherlands, to Lake Charles, U.S., seemingly received an offer at $47/t.

There is nothing new to report on the route to the Far East. Scheduled ships are filling up on contracts and small parcels, but there is nothing juicy that an outsider could use to go on berth. Therefore, rates remain unchanged.

Business to India and the Middle East Gulf is rather flat at the moment, and several ships are looking for small parcels with which to fill up their last remaining tanks. Base oils are scarce, with just a small parcel noted from the lower Baltic.

Asia

More cargoes have started to appear on routes within Asia, but on many, the earliest loading dates are mid-July, with the majority favoring end of July loading. This does little to help those prompt ships, of which there is a substantial number, but at least the surge in activity is welcomed by owners. There have been a lot of larger enquiries too, such as 12,000 tons of benzene, and another of 9,000 tons of benzene, perhaps in an attempt to keep freight levels in check, rather than having four cargoes of 3,000 tons each. There are still base oils looking to move out of Korea and Southeast Asia, but not to the same magnitude as was experienced 4-6 weeks ago. Palm oil traffic is starting to build, with a few more requirements into China, and quite a lot heading to India, the rates for which have begun to rise.

Fewer benzene cargoes are being quoted openly on the transpacific leg, although there are tales of off-the-market deals being struck. The lull in benzene might be linked to the U.S. styrene plant outage which has resulted in a glut of benzene in the U.S. Gulf, though the stoppage is expected to be short-lived.

Up to 8,000 tons of base oils have been booked from Korea to the U.S. Gulf, and another 6,000 tons are believed to be loading from Korea to South Africa and Argentina. Traders have also been looking to ship Thai base oils to Cuba, and possibly to West Africa. With bright stock values some $150/t-$200/t lower in Asia, there may be further exports, with freight not such an obstacle.

Base oils have also featured from Asia to Europe. It has been reported that 3,000 tons of base oils from Pyongtaek, Korea, to Haifa, Israel, were fixed in the $160/t region. Space is tight in July from both Southeast Asia and Northeast Asia to Europe.

The India and the Middle East Gulf market has been slow to reactivate after the Eid al-Fitr celebrations. In the regional markets, there has been concern over the implementation of the new Goods and Services tax scheme in India that has caused some cargoes, including some base oil cargoes from the Middle East Gulf, to be shelved.

Eastbound trade is rather dull.

Scheduled tonnage on the westbound service is having difficulty filling, though rates for outsiders seem quite firm still.

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.

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