SSY Base Oil Shipping Report


The effects of Hurricane Harvey have yet to emerge, but most analysts concur that in the short-term there will be changes to established product flows since so many production sites in the U.S. Gulf have been disabled.

U.S. Gulf

With nearly every chemical producer having declared force majeure, either as a precaution or as a direct result of damage or flooding, there has been virtually no new inquiry in the market into the Far East. Instead, numerous existing fixtures have been cancelled.

Traded is muted on the transatlantic route too. A couple of traders believe there may be a possibility to ship styrene to Europe towards the end of September, but nothing firm has come of it so far. Some traders wish to send some small parcels of glycol to Europe, whether from Geismar, Louisiana, or Port Neches, Texas, and another has been enquiring about moving a small parcel of cyclohexane to Antwerp later in September, but that has been it so far.

There is very little to report from the U.S. Gulf to the Caribbean, too, as it waits for Hurricane Irma to smash through the region.

Not much has happened along the route to the east coast of South America either. A trader was looking to send 20,000 tons of ethylene dichloride to Aratu, Brazil, and Maceio, Brazil, from Convent, Louisiana, and Point Comfort, Texas, but due to a force majeure declaration this cargo have been put on hold.


The North Sea and Baltic market has certainly been quieter, judging by the scale of prompt open tonnage available in the region. Were it not for biodiesel and ethanol, the North Sea in particular would be crowded with even more open tonnage. The Baltic however has been more rewarding, with a string of base oils fixtures to Gothenburg, Sweden, Riga, Latvia, Rotterdam, the UK and Nigeria.

It is easy enough to find prompt space into the Mediterranean these days. Several owners have even committed larger ships on berth, leaving up to three quarters of the ship still to fill. Very competitive rates should be achievable in these circumstances. Base oils are mainly represented by oil company product transfers. Turkish buyers have been on a week-long holiday to celebrate the national day as well as Bayram.

New business has been a bit thin out of the West Mediterranean, though contractual volumes remain decent and have helped owners re-position their ships from this area. 3,000 tons of base oils were booked from Leixoes, Portugal, to Le Havre, France, and there has been an attempt to ship base oils from Livorno, Italy, to La Pallice, France, a cargo that would normally be supplied by Spanish refiners.

From a base oil perspective, there have been several shipments within the Mediterranean, even though Turkey has been closed for business. North African destinations, such as Morocco and Tunisia, have seen freight enquiries this week, and there was some spot fixing of what would usually be term volumes. Biodiesel is the other big thing in the Mediterranean these days, with numerous cargoes fixed.

There was an initial surge in enquiry to the U.S. following the storm, but very little has actually materialized, probably because it is too early to determine who needs what product and where it can be stored. Analysts feel sure that products such as mixed xylenes, toluene, paraxylene, benzene and orthoxylene will head over to the U.S., but its a question of when. Base oils are likely to appear as well, but it is still just a little too early for freight enquiries. From the first wave of fixtures concluded, rates have not changed, with 10,000 tons of benzene being covered in the upper $20s/t.

It is said that Europe could end up supplying Asia with some of the material that would usually be sourced from the U.S. Gulf, but there have been no additional enquiries so far. Early September space is tight, but there are ships on berth later in the month that can be used.

The present batch of ships on berth to India has mostly filled, or in some cases the ships have sailed and are already on their way to Suez, Egypt. Acrylonitrile and possibly ethylene dichloride may appear, given the situation in the U.S. right now.


The domestic market has not been as busy in September as it was during August. Most ships are booked until mid-month, but thereafter it looks more ragged, with only a handful of vessel fixed through into October. The intra-Far East region is described as stable, with a number of methanol, styrene, ethylene dichloride, paraxylene and dioctyl phthalate requirements noted. Southbound is certainly sluggish. Northbound continues to see regular requirements of paraxylene, methyl tertiarybutyl ether, methanol, glycols, benzene, pyrolysis gasoline and styrene. Space is generally quite tight and several traders have been spurring on their brokers to find ships able to load base oils to Nantong, China.

Intra-Southeast Asia is perhaps the surprise this week. Usually there are masses of ships around, but contractual demand is strong, as is spot demand and rates are understood to be firming. 6,000 tons MTBE from the Malacca Straits to South China is reckoned to have gone in the low to mid $20s/t. A stronger palm oil market is another reason for the firmer levels as rates there have picked up and a growing number of owners are switching and taking palm oil instead.

Everyone is expecting the transpacific export route to produce a lot more enquiry. Currently, there are a number of tentative enquiries for paraxylene, benzene, vinyl acetate monomer, caustic and acetic acid. Base oils are expected to fly too, but none are firm. Rates are still moderate, with owners willing to accept $40s/t for 10,000 tons lots, but there is not a great deal of space so those levels could rise. Clean petroleum is also strong and owners of larger ships can do fairly well. 35,000 ton cargoes from Korea to the U.S. west coast are paying slightly over $1 million, and from Singapore the rates are over $1.6 million. There is not a great deal of space to Europe either, but here too, rates are fairly moderate, so long as the cargo fits nicely into the ships position.

Despite the heavy monsoon rains that have caused problems in some Indian ports, and even though it has been the period of Eid in the Middle East, the regional market into India and the Middle East Gulf has been reasonably buoyant. Space is actually quite scarce for some loading dates, with some cargoes quoted over and over again without getting fixed. Eastbound seems to have a shortage of completion space on larger vessels, and even westbound space is confined to just a handful of owners. Perhaps if there were more large cargoes then more vessels would go on berth, but for now, rates are governed by those ships that have the space.

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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