European markets continue to lag behind the other major markets in the United States and Asia in terms of activity. Freight levels in Europe are therefore soft in comparison to the other regions.
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The amount of business being conducted into Asia from the U.S. Gulf is quite enormous. Already, most of the regular ships report little or no remaining space for November, but what has relieved the pressure is the considerable number of additional ships that have gone on berth. More ships are poised to jump in as well. At the moment, $60 per metric ton seems to be the peak of the market for 10,000 tons lots from Houston to China, but such levels may also be achievable for just 5,000 tons if the extra space does materialize. Lower levels are believed to have been done in a couple of instances in which ships needed to reposition out to Asia. Grades being moved include styrene, glycols, paraxylene, ethylbenzene, phenol, acrylonitrile, ethanol and methanol, but no base oil.
Cargo opportunities have been a bit thin this week along the transatlantic route, although there is still some cumene from Houston, and a 3,000 ton parcel that requires heating from Houston. There are a number of inquiries to Mediterranean destinations, such as styrene, caustic and vinyl acetate monomer, but owners who are on berth are shooting high, believing in the scarcity value of their ships.
The clean petroleum market into the Caribbean remains firm, but so far, apart from a couple of small cargoes, there has not been the deluge of demand that was expected to spill over into the small chemical sector. Base oils are still flat, and chemicals demand is patchy.
Ethanol is one of the more consistent products moving southbound into the east coast of South America, as is caustic and paraxylene. A somewhat large shipment of base oils occurred from the U.S. Gulf to the west coast of South America but is believed to have been a contractual relet.
There is ample space to India and the Middle East Gulf, with only a limited number of cargo opportunities. Rates are still hovering in the mid $60s/t for 5,000-ton parcels to the west coast of India.
More owners have been able to report a busier contractual market for the start of November along the North Sea and Baltic route. However, the spot market has not managed to keep pace, and while there have been more biofuels and gasoline components noted this week compared to the previous week, it is still too thin to soak up all the open space, so rates are starting to sag. Base oils are pretty slow out of the Baltic, with just a single cargo loading from Riga, Latvia.
There are a lot of ships around the southbound route, keen to go back into the Mediterranean. There has also been a fair bit of demand, and rates in some cases have stabilized or even firmed. Six thousand tons of biodiesel were fixed from Rotterdam to French Mediterranean for $180,000, for instance, and 4,000 tons of base oils from Contirange, United Kingdom to Turkey were booked at a reported $325,000. Six thousand tons methyl tertiarybutyl ether were fixed from Rotterdam to two ports in Portugal for around $150,000. Additionally, 6,000 tons of base oils were fixed from Fawley, U.K., to Vado, Italy, on a ship that typically trades in the Baltic. Other fixtures include orthoxylene, paraxylene, styrene, ethanol, ethylene dichloride and acrylonitrile.
It is not exactly busy going northbound, yet ships are steadily filling, and there have been one or two cargoes which have been around a while and have not yet been covered. Rates seem stable – 11,000 tons renewable fuels from Venice to Lavera, France, and Antwerp-Rotterdam-Amsterdam were worked at close to $400,000, which is similar to last-done. Four thousand tons of heavy aromatics from Leixoes, Portugal, to Antwerp-Rotterdam-Amsterdam were fixed for $93,000, which is a typical level.
The Mediterranean market is labelled as slow by many owners and brokers, yet there has been very little prompt space available over the past week or so. A few more ships are getting close to being prompt now, and, unless more cargoes are quoted, there is a chance that rates could crumble. At the higher end of the scale, 2,500 tons of base oils from Cartagena, Spain, to Haifa, Israel, reportedly paid 110,000, and 3,300 tons biodiesel Huelva, Spain, to Augusta, Sicily, obtained $37/t.
The transatlantic market is a real mixture at the moment. There have been on occasion some very competitive numbers done, yet on other times the levels are closer to normal. A 7,400 ton shipment of benzene from Rotterdam to the U.S. Gulf was claimed to have fixed at $20/t, but there have also been counter-claims that the cargo was 9,000 tons and went in the low $20s/t. More benzene has been quoted in the 5,000 tons to 10,000 tons size. Six thousand tons of paraxylene were fixed from Rotterdam to the U.S. Atlantic Coast at $28/t, with others reportedly fixing more paraxylene from Antwerp, and 4,500 tons wax from the U.K. to two ports in the U.S. Gulf fetched $60/t reportedly. Further acetic acid shipments are planned and traders have been studying parcels of mixed xylenes, and 1,200 tons of base oils are quoted from Rotterdam to the U.S. Gulf.
Traders have been eyeing styrene and paraxylene possibilities to Asia, but none are believed to be firm. Nine thousand tons of base oils were booked from Antwerp-Rotterdam-Amsterdam to Singapore and Ulsan, South Korea, and there is now a further 3,000 tons base oil inquiry from Antwerp to Yangtze River, China. In addition, there is some rubber processing oil-type material to be moved from Hamburg, Germany. More unusual was the fixture of 16,500 tons of methanol from the Black Sea to China.
The India and Middle East Gulf route is attracting a lot of tonnage whose owners are glad to find cargoes that will take their ships away from a region that seems overloaded right now. There is nothing sexy about the rates that owners are talking, with most opting for low-ball figures. It is painful for them, but they have to do it.
The intra-Asia market is at a stage where it becomes difficult to predict where it will go next. Most regional routes have been so busy over the past few weeks that November space has been hard to locate. The number of fresh inquiries seems to have dropped off however, especially on the hot intra-Far East service. Is that because charters see little point in quoting business that cannot be covered, or is it because end-user demand is satiated? Realistically, it is possible to fix cargoes up to a month away, but after that it becomes harder. Pinning down precise loading dates, ensuring ullage in the customers tanks, finding a loading window and determining how much space will remain to an owner once contractual obligations have been received are some of the problems. Further complications are provided by bad weather delays – some Korean ports are running at over 10 days berthing delay – or by colder weather which will stimulate demand for the transportation of fuels. Some suggest the palm oil market will flatten, with Chinese demand well-covered already, and with uncertainty in India about import duty and whether that will that free up some ships later in the month. In spite of giving the appearance of solidity, there is in fact a lot of uncertainty within Asia.
Traders have been actively seeking space for benzene on the transpacific route, but there is very little space remaining for November. Rates in the $50s/t have been quoted for 5,000-ton parcels, up from the typical high $30s/t level of two months ago. Traders were heard bidding in the low to mid $40s/t for 18,000 tons of benzene from Korea to the U.S. Gulf. November space to Europe also looks rather tight, even though an extra ship has gone and berth to Turkey and is now almost entirely full. Several biodiesel requirements have been noted from China to Europe, and there are a couple of base oil enquiries to Turkey and Italy. Five thousand tons of aromatics from Southeast Asia to Antwerp-Rotterdam-Amsterdam were covered in the $70s/t.
The regional markets have produced many enquiries, and prompt space is not easy to find into India and the middle East Gulf. Six thousand tons of base oils were attempted from Al Ruwais, U.A.E., to Mumbai, India. In one case the cargo was worked in the mid $30s/t, but failed to conclude, and in another the cargo went on subjects at $29/t, but that too failed to materialize. Eastbound in general is strong, but from time to time it can be possible to pick off the completion space on a ship at rates that are not that much higher than previously. Westbound space is scarce. Seven thousand tons of acetic acid was heard fixed from Al Jubail, Saudi Arabia, to the U.S. Gulf at just over $1m. There are numerous cargoes of methanol, caustic, pyrolysis gasoline, benzene, wax, vinyl acetate monomer, acetic anhydride, linear alkyl benzene and glycols quoted in this direction. It transpired that 4,000 tons of base oils from Yanbu, Saudi Arabia, to Alexandria, Egypt, were booked back in October.
Adrian Brown is a senior market analyst for chemicals and base oils with SSY Shipbrokers, London, can be reached firstname.lastname@example.org +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.