SSY Base Oil Shipping Report


Almost anything to do with the Asian market has been subdued over the past week. The European market is ticking over, without really breaking into a sweat, and the U.S. market is doing pretty much the same.

U.S. Gulf

Celebrations for Chinese New Year certainly took their toll on the route to the Far East over the past 10 days or so, but all the same there has been a reasonable amount of activity into other Asian countries where the break was shorter. February space is now looking quite tight, even though several styrene cargoes were cancelled following some plant issues in the U.S. Gulf. Those ships affected are believed to have secured cargoes such as ethylene dichloride as replacements. One ship filled out with a large slug of vegetable oil too. Base oils have been actively pursued into Asia as a result of product shortages within Asia. Traders have been looking at ethanol and paraxylene, although most of these will probably slide into March. Rates are mostly stable.

The eastbound transatlantic route is not exactly buzzing on the spot market, yet space is not readily available either, which is causing rates to lift slightly. Styrene should be possible, but few traders can pull the trigger due to product shortages. As it is, the majority of cargo enquiries are not commodity-type products, but are grades such as urea ammonia nitrate, ammonium thiosulphate, tall oil, ethanol, palm oil, ethylene dichloride and biodiesel. Base oils are not being targeted towards Europe and are rarely seen. Rates have a slightly firmer edge to them.

There have not been many base oil requirements into the Caribbean and Mexico recently, but there is quite a bit of demand for many other cargoes. On top of that, there has been a great deal of disruption caused by fog in the Houston Ship Channel with the result that so many ships are delayed or out of schedule that February space is quite tight all round.

The parcels market into Brazil and Argentina is still relatively strong, or at least active enough that rates have not gone down. Ethanol has been the major commodity, and smaller cargoes, such as 10,000-cubic meters lots are reported to be paying quite strong levels, according to owners. Larger cargoes, however, are competing against clean petroleum ships and 40,000 cubic meters of ethanol was fixed at just $925,000, for example. Some small base oil fixtures were noted into Brazil, but nothing out of the ordinary so far.

Base oils have been actively marketed into India, and at least one cargo of 8,000-10,000 tons has been booked. The market is holding up well due to high volumes of ethylene dichloride and ethanol that are being assembled in the U.S. Gulf, and unless additional tonnage were to go on berth, the next available space will not be before March.


In North Sea and Baltic trade, contractual demand seems to have speeded up, and some owners report having been able to cover their ships by as much as two weeks in advance. There are, however, quite a large number of ships still open within the next five days and therefore, rates are mostly unchanged. Water levels on the Rhine have almost doubled, which is helping free up some of the backlog of material stuck at both ends. Base oils are still moving from the Baltic to the United Kingdom and the Continent, but not in any great volume.

Some traders have been discussing possible base oil shipments southbound to Turkey, Egypt and Algeria, amid the usual volumes of paraxylene, orthoxylene, styrene, ethylene dichloride, caustic, ethanol, vegetable oil, cumene, paraffins and biodiesel. Luckily for owners, contractual demand remains stable, so there is not a great deal of space around and rates are static.

On northbound routes, some traders have been eyeing base oil possibilities to Antwerp-Rotterdam-Amsterdam from Greece this week, as well as the more usual term supplies from the majors. Generically, space is pretty tight, but there are some exceptions and therefore, rates may not go the way that owners want.

In the Inter-Mediterranean market, prompt space is still pretty tight in the West Mediterranean. For a while it had seemed that there were fewer cargoes of FAME around, which would have exerted some downwards pressure on rates, but the last few days have seen a surge in the number of prompt FAME quotes. There have been some unusual shipments from the Black Sea area, such as FAME from Varna, Bulgaria, benzene from Illichevsk, Ukraine, and MTBE from Temryuk, Russia. These may somehow be linked to the icy conditions in some Black Sea ports and rivers, but this still has to be ascertained. Base oils continue to move out from the Black Sea, mostly into neighbouring countries.

The westbound transatlantic market is fairly robust, with cargoes of paraxylene, toluene, mixed xylenes and pyrolysis gasoline all being booked and filling out the available candidates in February. Sulphuric acid is also being lined up and there was another slug of 20,000 tons of MTBE to be moved. There are plenty of small parcels too, including wax, solvents and even some small lots of base oil. Rates are pretty strong – a cargo of 5,000 tons of aromatics Rotterdam, the Netherlands, to Houston, U.S., fixed in the mid $40s per metric ton, although the rate included a small additional sum for transhipment.

Europe-to-Far East traders are waiting to see if cargo replenishment does in fact restart following the lunar holidays. Styrene pricing in Europe, however, prohibits much movement, and instead, traders are considering sending toluene and mixed xylenes to Asia. For now, there is not a great deal of open space, but with several ships just over the horizon at the end of the month and in early March, volumes will need to increase if the current rates are to be sustained. There has been a substantial amount of base oil booked over the past week or so, with levels in the $70s/t and $80s/t for 10,000-12,000-ton cargoes, but new business looks to be on hold.

Recent chemical volumes have been substantial and a lot of additional tonnage has been sucked up onto the route to India and the Middle East Gulf. Not all these extra ships have managed to fill out however, which leaves some possibilities for those with smaller lots of 3,000-5,000 tons. Base oil enquiries are not as abundant as a week or so ago.


The regional Asia market is slowly starting to uncoil after the long holiday period, and more enquiries are being quoted for later February and even March shipment. Bad weather stretches down from North China all the way into the South China Sea, which has meant a large number of cancelled vessels and sublet cargoes. These have tended to balance each other out, with the result that freight rates are largely unchanged.

As expected, there is still no benzene on the transpacific east route to the U.S. Traders are toying with paraxylene and mixed xylenes instead. Several ships in February have ample space, although rates are not really coming off since bunker costs are pretty much the same, and the alternative of taking a full cargo of clean petroleum to the U.S.s west coast for between $900,000 and $1 million holds some appeal for less sophisticated carriers. With Asia so tight on base oil, there is very little happening to the U.S.

The market to Europe is basically unchanged too. There is not a great deal of tonnage on berth, but nor is there any significant demand to cause outsiders to send their ships in this direction. Rates are therefore stable.

Demand remains strong on the regional India and the Middle East Gulf routes, and rates reported have been firm. Since there is not a great deal of space around, the new freight tax imposed by the Indian government is likely to be passed across to charterers to pay by way of higher rates. There have been plenty of local base oil possibilities, some from Iran and others from the United Arab Emirates, crisscrossing the region.

Eastbound trade has been busy, especially from Iran, and since the regular Korean and Chinese owners have pretty much exclusivity on these cargoes, it does mean that the other charterers from the Middle East Gulf have fewer candidates to work with, which keeps their rates on a firm basis.

Westbound, however, is weak. Paraxylene in the amount of 10,000 tons from Yanbu, Saudi Arabia, to Rotterdam fixed in the low $50s/t, along with 6,000 tons of benzene from Sohar, Oman, at the same level. In mitigation, the ship needed to reposition, but these levels will be benchmarked by other charterers, especially since there is ample space available this month.

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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