For the first time in seven or eight months, freight levels from Europe to Asia are now higher than those from Asia to Europe. The fronthaul route has been relegated to the backhaul, and the same is about to occur on the U.S. Gulf of Mexico to Asia route too. Chemical demand from Asia, in particular China, is driving it all. Other routes have had a less dramatic week, but there is a feeling that the space situation is not quite as desperate as before across many areas.
U.S. Gulf of Mexico
Heavy contractual demand, coupled with a lively spot market has depleted the key U.S. Gulf to Asia routes of surplus space. We see freight costs rising fast, and have noted 10,000 ton cargoes of aromatics fixing U.S. Gulf to scheduled principal ports in the Far East in the mid-to-high $60s/t. Tonnage choice is limited to some additional units that one owner has introduced on the route, or being able to entice tonnage away from other routes.
The draw of tonnage onto the Asian route is having an effect on other routes out of the U.S. Gulf too. For example, numbers on the inter-Carribean trades have firmed by around $3/t, and will probably only continue to push upwards with the news that Jo Tankers are pulling out of the service. Numbers into Brazil are facing the same increase, if not more. We suggest 5,000 t cargo U.S. Gulf to Santos can easily cost $45/t. Transatlantic freights have firmed as well, helped by a surge in styrene demand that has seen 5,000 t cargoes from Houston to Rotterdam pay close to $50/t.
Europe
Trade to Asia continues at a busy pace, sucking in more tonnage that would otherwise trade on other routes. A wide variety of chemicals have been seen, and even several base oil cargoes fixed. Rates are in the mid $80s/t for 5,000 t lots from Antwerp-Rotterdam-Amsterdam to Korea-Taiwan-mainport China. Some part-cargo space can be picked off, sometimes at lower levels.
Owners are becoming increasingly reluctant to send ships to Asia, knowing that it will be problematical bringing them back with so many other vessels open in the region. Phosphoric acid to India and Pakistan has taken a lot of space, as have vegetable oils from the Black Sea. We are just starting to see a few new pyrolysis gasoline quotations from the Mediterranean to Jebel Ali, which might create a few combination possibilities for base oils. Numbers remain in the $50s and $60s/t, depending upon cargo size and load-discharge ports.
Space is fairly easy to locate transatlantic with owners keen to move ships into an area with fewer competitors. We see 4,000 to 5,000 t lots going from Antwerp-Rotterdam-Amsterdam to Houston in the low $40s/t. Inter-European rates are mostly flat, and vessels can usually be found for most requirements.
Asia
The trade routes from Asia to both Europe and the United States continue to sag under the burden of extra ships becoming available in the region. We estimate that it is possible to fix 5,000 t cargo from Korea to Rotterdam for close to $80/t, and would expect that levels in the mid $70s/t would work on basis Southeast Asia loading. Sending a small cargo of, say, 3,000 t from Southeast Asia to the Caribbean would see numbers in the mid $90s/t for example.
Trade is brisk in the small parcel trade within Asia, with probably the best opportunities of securing competitive freights on routes within Southeast Asia. Elsewhere, demand is quite high into China especially, and rates are displaying firmer tendencies. Quite a lot of tonnage is showing open in the Middle East Gulf-India region, and we see freight levels coming off for prompt loading. A 5,000 t cargo from Iran to Mumbai would fetch in the low-to-mid $20s/t, and probably in the mid-to-high $60s/t back to the East Mediterranean.
French dock workers will join the general strike scheduled to take place in France on Thursday, March 19. The stoppage will commence at 6 a.m. and will last 24 hours, and work at French public docks, jetties and oil terminals will be affected.
Jo Tankers has advised customers that they will be pulling out of the U.S. Gulf to the Caribbean service. The ships that currently ply this trade have been circulated for sale. To service the route properly would take considerable investment in newer tonnage to which the company said it is not prepared to commit, given the limited upside potential.
Adrian Brown is senior market analyst for chemicals and base oils with SSY Shipbrokers, London. Information about SSY can be found at www.ssyonline.com. Adrian Brown, in the U.K., can be reached directly at research@ssy.co.uk or by phone at +44 1207-507507. In the U.S., SSYs Steve Rosenthal can be reached at fix@ssychems.com or +1 203-961-1566.