U.S. markets are slowly coming back up after Hurricane Harvey, but there is still a lot of uncertainty. Europe has been very slow over the past week, but Asian markets continue to strengthen.
Get alerts when new Sustainability Blog articles are available.
There have been many cancellations of previously-fixed voyages to Asia, but now some of these are starting to revive. Prior to Harvey, there had been minimal amounts of September space. Immediately following Harvey, there was a lot of space due to the cancellations, but as both new and existing shipments get confirmed, space is starting to tighten again.
There is perhaps 25,000-30,000 tons available right now, but easily that volume of fresh enquiry already in the market, including cargoes of methanol, ethylene dichloride, styrene, paraffins, ethylbenzene, pyrolysis gasoline and vegetable oil. As space tightens, the initial bargain rates in the low $50s per metric ton for 5,000-ton parcels are coming to an end and levels are already approaching mid- to high $50s/t.
As with other routes out of the U.S. Gulf, transatlantic cargo volumes are starting to materialize. For a short while there were several pyrolysis gasoline requirements, but these have been redirected to Asia instead. Styrene is now the chief priority, with other requirements of glycols, ethanol and biodiesel starting to emerge. Rates are lower than pre-hurricane by around $5/t, so low- to mid $50s/t for 5,000-ton parcels. Should the cancellations be reversed, space could tighten and rates might rebound. Four thousand tons of tallow was booked from the U.S. Gulf to Nigeria, with an option for a further 3,000 tons of caustic. The rate is believed to be $145/t-$155/t.
U.S. Gulf to Caribbean spot business is understandably muted. A couple of tenders for solvents and sulphuric acid have popped up. Several parcels of glycol and acrylonitrile have also been noted, and there has been some vegetable oil and toluene. Base oils are expected to ship to Colombia, subject to an award of the tender. Currently, there is ample space around and rates are not expected to firm.
It has not been that busy into South America either, and there is prompt space available. Four thousand tons of base oils were quoted from Pascagoula, U.S., to Brazil.
Prompt space to India and the Middle East Gulf is rather limited and 2,000 tons of easy chemicals from Houston to Kandla, India, were fixed for close to $110/t. Traders are starting to enquire about small lots of aromatics to India.
The North Sea and Baltic region remains very quiet overall with more ships than usual open in prompt positions. There have been very few highlights, but base oils perhaps qualify with yet more business emerging from the usual Baltic ports, as well as from Kalundborg, Denmark. Biodiesel is perhaps the other product that seems fairly active. Rates have a softer feel about them due to the amount of available space.
There is ample space available on Southbound routes and rate levels are under a great deal of pressure. It is hard to say if this is a direct consequence of Hurricane Harvey, but the volatility in commodity prices is unlikely to have helped, and even regular buyers have been absent, which suggests it may be a pricing issue. Base oils have not really featured this week.
Northbound business has been slower than it was a couple of weeks back. Most of the aromatics parcels that were quoted have now been covered, including those from Chernomorsk in Ukraine, Constanza in Romania, Aliaga in Turkey, and from Italian ports as well. The cargoes from Skikda, Algeria, and Lavera, France, however, ended up in Spain. The only active route has been that from northern Spain and Portugal, with some surprisingly strong rates recorded.
Base oils have been busy again in cross-Mediterranean trade, with spot shipments fixed out of Kavkaz, Russia, and from ports in Greece, Italy and Spain. Rate levels within the Mediterranean have, however, decreased by typically 5,000-10,000 per voyage. The exceptions seem to be those requirements which need strict vetting. Styrene – 3,000 tons from Tarragona, Spain, to Ravenna, Italy – paid 45/t, for example, and 3,000 tons of MTBE from Marseille-Fos to an Adriatic port went for 115,000.
It is still a little early to see all the transatlantic cargo requirements that were anticipated actually come to fruition. In terms of benzene, there has been something like 30,000 tons fixed, almost all off-market and at rates in the mid $20s/t for 10,000-ton lots. Several paraxylene cargoes have been noted. These were expected, but Asia seems to be getting the lions share of that action. Further aromatics – such as orthoxylene, paraxylene, toluene and cumene – are under discussion. Four thousand tons of acetone were fixed from Antwerp-Rotterdam-Amsterdam to the U.S. Gulf and a cargo of alkylate and reformate was covered out of Sines, Portugal.
A small parcel of base oils was fixed from Hamburg, and there has been some wax, too. Rates remain competitive, given the number of ships either on berth or available in the area.
On the route to the Far East, nothing additional has been seen so far that can be directly attributed to the hurricane. However, space is starting to open up even on scheduled carriers. Rates for 5,000-ton parcels to Korea could now be worked in the low $80s/t, though there is not a lot to even test those figures. A large slug of base oils was quoted to Singapore by a major, and another producer fixed 8,000 tons of base oils from Rotterdam, the Netherlands, to Singapore and to Ulsan, South Korea.
Not all the India and the Middle East Gulf requirements that had been pushed around firmed up, especially on the small lots of aromatics. However, a few parcels of acrylonitrile, acetone and hexane were covered. Vegetable oil traders are expecting the new harvest to be processed soon, which ought to result in more vegetable oil shipments out of the Black Sea.
Higher freight levels have been reported across most of the regional routes within Asia, with 5,000-ton parcels from Korea to Singapore now achieving $25/t, and low- to mid $20s/t from Korea into mid-China. Parcels amounting to 3,000 tons from Singapore to mid-China command mid $40s/t and low $20s/t into Malaysia. Increased demand seems to be responsible, especially for aromatics, but there has also been a knock-on effect from the busier clean petroleum and palm oil markets that have seen a general tightening of space within Asia.
Base oil demand seems steady, with small parcels noted more than larger lots.
Export business is quickly picking up on the transpacific route, with paraxylene leading the charge. Several large cargoes have been booked in the last day or so, and rates are rumored to be considerably higher than the $30s/t than have been the norm for the past couple of months.
There have been rumors of base oil looking to move, but nothing firm has yet come to light. Space is reported to be available from Korea and Singapore to Europe on scheduled vessels, as well as on a couple of outsiders. At the same time, 9,000 tons of base oils from Malacca, Malaysia, to Antwerp have been quoted for the past week and remain unfixed. Several cargoes of biodiesel have been seen from China and Southeast Asia, and a few traders, anticipating some disruption of supply to U.S. caustic, have begun to ask questions about shipping caustic to the Mediterranean and to Durban.
India and the Middle East Gulf demand has been strong. Space is a bit tight, and berthing delays caused by the monsoons in India have further tightened tonnage availability. Clean petroleum has been especially active, but there have been plenty of chemicals requirements as well.
Base oils are active out of Iran, and 6,000 tons of base oils were fixed on subjects from Al Ruwais, U.A.E., to Mumbai at $26/t. That particular deal failed, but other traders are quoting similar requirements.
Most eastbound cargoes are methanol, MTBE, ethylene dichloride or aromatics.
Westbound does not feel especially busy, yet there are cargoes out there that have been quoted for the past week and remain unfixed. Traders have been checking rates on paraxylene to the U.S., Mexico and Brazil, with rumors that some have been booked at higher numbers than normal. A 10,000-ton haul of base oils was rumored to have fixed from Ruwais to Lagos, Nigeria.
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.