SSY Base Oil Shipping Report


Whereas most long-haul routes enjoyed another productive week, the same cannot be said for most coastal routes, with the exception of the United States. Inter-European business is characterised by fierce competition from owners for almost any cargo, and freights display a weak tendency. Inter-Asian markets are also fiercely competitive, especially for the larger cargoes above 5,000 tons. Otherwise, demand is good for chemicals, including base oils, from Europe and U.S. Gulf of Mexico to Asia, but Transatlantic has lost its shine.

U.S. Gulf of Mexico
There are a couple of larger ships open prompt in the U.S. Gulf seeking cargoes. These owners prefer not to follow the crowd and go to the Far East, but it is hard to resist as freights continue to climb on that route.

Scheduled carriers tend to be full through April, and so rates are being talked up, with some owners even quoting $80/t for 10,000 t cargoes from the U.S. Gulf to China. So far, fixing levels in the $60s and $70s/t are being achieved, but space is running out fast.

There are not many other interesting routes for owners with ships open in the U.S. Gulf. Transatlantic eastbound has stalled, with styrene fading, and the same for biodiesel.

The U.S. Gulf to South America remains a possibility for the ships because the drought continues to affect water levels in the River Plate, meaning that smaller ships of 20,000 dwt or less are ideal. However, there are few chemical cargoes quoted from the U.S. Gulf to the east coast of South America at the moment, causing rates to slip by a couple of U.S. dollars.

We think 5,000 t cargoes from the U.S. Gulf to Santos are now workable in the low-to-mid $40s/t. U.S. Gulf to Mexico numbers have firmed, however, mainly due to stronger demand and fewer positions, and we are booking 5,000 t cargoes for nothing lower than $30/t.

The trade lane from Europe to Asia is the busiest of all the routes out of Europe. Demand is strong, especially for aromatics, including benzene and paraxylene. Unusually large cargoes of acetone have been quoted too. Several base oil cargoes have also been booked. Rates are firm, but have not risen further.

Phosphoric acid and pyrolysis gasoline cargoes continue to mop up space to India and the Middle East Gulf, but again, freights are stable.

Transatlantic westbound gives the impression of activity, with caustic, UAN, paraxylene and benzene all moving, yet rates have declined marginally, with 5,000 t cargoes from Rotterdam to the U.S. Gulf now paying in the low $40s/t.

There have been a few signs that traders are looking at gasoline components in time for the usual gasoline season in the United States, but this year trade is slack.

Rates for the usual 37,000 t cargoes of clean petroleum from Antwerp-Rotterdam-Amsterdam to the U.S. Atlantic coast are around Worldscale70 to 75, well below the breakeven rate needed for a vessel running transatlantic, but symptomatic of demand right now.

The European coastal market can only be described as horrible, with a lot of tonnage open with no employment. Even contractual demand is down, forcing yet more tonnage onto the open spot market.

Owners with vessels open in Asia are struggling to find cargoes to place the ships back into either the United States or Europe. Neither aromatics nor caustic work into Europe or the U.S. Sulphuric acid to Chile was once a mainstay commodity, but with prices effectively at $0/t, freight of any sort is a major burden.

We have seen freights drop, especially to Europe, and see small parcels of 2,000 t to 3,000 t from China to the Eastern Mediterranean paying below $100/t.

There has been some interest from Europe in Asian biofuels as an alternative to heavily-taxed imports from the United States, but volumes are insufficient to take up all the slack tonnage. Palm oil demand is steady, and as in the West, rates for modern handy-sized tankers are low, encouraging palm oil traders to fix 35,000 to 50,000 t cargoes rather than small lots that command higher levels.

Inter-Asian chemical demand is fairly good, but always aimed at smaller tankers with small parcels, which is of limited use to the 10,000 to 30,000 dwt chemical ships open in the region.

Swedish ship owner SRAB has cancelled new-building contracts with Turkish shipyard Eregli for three 8,400 dwt chemical tankers that were due for delivery later in 2009. As a consequence, SRAB forfeits the deposit of SEK 32 million ($3.83 million), but this was the cheaper option as the vessels have declined in valued by SEK 150 to 200 million. SRAB already posted worse financial results for 2008 than the previous year, with losses running to SEK 32 million.

U.S. Hurricane Season: Various experts have been compiling their predictions for the 2009 season. Some suggest lower hurricane activity this year due to the El Nino effect. Others suggest it will be another strong year, and warn of under forecasting. The 10 year moving average suggests there will be 17 named storms, nine hurricanes and four intense hurricanes in 2009, which is somewhat higher than the consensus, or average forecast provided by specialist organisations. The next couple of months will see further predictions published, but only time will tell!

Due to attendance at the NPRA meeting in San Antonio, there will be no SSY base oil shipping report published next week, April 1.

SSYs Singapore office has expanded. Sanjib Kumar has joined the SSY chemical team in the Singapore office as a shipbroker, and Ignasius Fernandez is handling operations for the team.

Adrian Brown is senior market analyst for chemicals and base oils with SSY Shipbrokers, London. Information about SSY can be found at Adrian Brown, in the U.K., can be reached directly at or by phone at +44 1207-507507. In the U.S., SSYs Steve Rosenthal can be reached at or +1 203-961-1566.

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