U.S. Gulf of Mexico
The route to Asia is easily the most dramatic of all the U.S. routes. Freights in the $70s per ton and even $80s/t have been seen for 15,000 t cargoes from the U.S. Gulf to China. Types of cargo in demand are not confined to just aromatics, for example, but straddle most chemical compounds, indicating that demand originates from a wide range of end-user industries.

Lack of available space is the biggest drawback to sourcing U.S. material, and we see freights of over $100/t for 4,000 t cargoes from the U.S. Gulf to China. The month of May also looks tight on space, and it is conceivable we will see owners ballasting into the U.S. Gulf from other areas.

Transatlantic eastbound is flattening, however, as chemicals demand wanes. Expect to see rates decline further from current levels of mid $40s/t for 5,000 t lots from Houston to Rotterdam. Space can be found too on the U.S. Gulf to east coast South America service, and levels may creep down into the low $40s/t for 5,000 t cargoes. The U.S. Gulf to the Caribbean is tight on space, but freights have not changed hugely.

Some owners may be tempted to consider taking base oils from the U.S. Gulf to the Mediterranean or to Lagos as an alternative to ending up in Asia, but do not expect to see bargains – we note 6,000 t of chemicals from the U.S. Atlantic Coast to Turkey paid $75/t.

Europe
Regional intra-European trades are mostly flat, and there are quite a few ships open in the region which will ensure competitive rates for most requirements. With the clean petroleum side so quiet, there are plenty of clean petroleum tankers willing to take a look at base oils.

Transatlantic westbound is sluggish from Northwest Europe. Benzene theoretically is workable, but better margins are to be had from selling into Asia instead. Cargoes of 5,000 to 6,000 t from Rotterdam to the U.S. Gulf have been worked around $34 to $35/t, with larger lots going for under $30/t.

The Mediterranean to U.S. Gulf route is stable with some space seen. Base oils from the Mediterranean to Lagos or even from the Baltic to Lagos may appeal to some owners, with numbers in the $60s and $70s/t, depending upon size and loading port.

By far, the most action is taking place on cargoes east of Suez. Strong rates to China are encouraging smaller vessels on berth too. We see 5,000 to 6,000 t cargoes to Korea or Taiwan paying around $88/t, and a few dollars more for China, with 2,000 t cargoes to Taiwan or Korea paying just over $100/t.

Indian phosphoric acid buyers have just renegotiated lower prices for imports from the Mediterranean, but it does mean that there will be a steady flow of material over the next couple of months, siphoning off yet more tonnage from other routes. We would say that 5,000 t cargoes Rotterdam to Mumbai would end up costing in the mid-to-high $60s/t. Mediterranean or Black Sea loading could lift that level slightly.

Asia
The market in Asia is looking distinctly overcrowded, and some owners are feeling uncomfortable with so much open tonnage. Moreover, there are not many spot chemical export opportunities, causing freights to weaken further. Several ships have open space from Asia to the United States, and a 5,000 t cargo to the U.S. West Coast could probably be taken in the low-to-mid $50s/t, with levels to Houston below $65/t.

Palm oil rates to Europe are weak, mainly because these cargoes move in larger 30,000 to 40,000 t lots, and with the clean petroleum market so flat in Asia and a large number of ships of this size still to be delivered from shipyards in 2009, rates on these bigger slugs are down into the low-to-mid $40s/t. As there are not many cargoes to be worked from northeast Asia to Europe, many of the smaller ships will end up heading into the Malacca Straits for palm oil too, inevitably depressing rates even further.

With this kind of situation, there may be an opportunity to fix a base oils cargo from either Korea or southeast Asia as an alternative, and if the numbers are still above the rates paid for palm oils some owners may deem it acceptable. There are quite a few ships open in India and the Middle East Gulf too, which is good news for those charterers able to load base oils back out again. Freight for 5,000 t base oils from the west coast of India to the eastern Mediterranean would probably be around $60 to 65/t, but a larger lot could see levels in the mid $50s/t.

Notes
Incidents of piracy have escalated after a long stretch with few reported attacks. Ironically, the Bow Asir, on charter to Odfjell, was taken nearly 400 miles from the Somalian coast whilst on her way to discharge in Mombasa. Odfjell had a policy of not sending vessels via Suez in order to minimise the risk, but on this occasion the ship was coming in from the Middle East and was a long way from the hotspots in the Gulf of Aden.

A smaller Greek tanker, the Nipayia, on charter to a company supplying fuels along the East African coast, was taken on the previous day, March 25, in the same vicinity as the Bow Asir. There have since been several further hijackings of dry cargo ships, including the Malaspina Castle and the Hansa Stavanger.

Elsewhere, there has been strong criticism by the Philippine government towards the agency responsible for crewing matters on the Stolt Strength for not doing more to secure the release of the 23-man Philippine crew. The ship, which is on charter to Stolt Nielsen from Japanese owners was seized Nov. 10 with a cargo of phosphoric acid on board, and there are growing concerns over the welfare of the crew over this length of time.

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.