U.S. Gulf of Mexico
Overall, activity out of the U.S. Gulf is steady. There are several prompt ships open in the U.S. Gulf, but this is not indicative of a quiet market, but more the choice of the owner not to fix certain cargoes in certain directions.

Asia for example holds little appeal to many owners as they will simply join the queue of open ships in Asia. Moreover, freights to Asia have peaked, especially to China. Methanol for example no longer works into China from the United States, and we have seen fixtures being unfixed due to unfavourable economics.

We therefore see lower freights on ships scheduled to China, with 5,000 ton cargoes down by about $5 per ton to the low-to-mid $80s/t. Even smaller parcels are being snapped up at around $100/t for 2,000 t, when they would have cost $120 to $130/t a couple of weeks ago.

Shipments from the U.S. Gulf to India remain solid at around $90 to $95/t for 4,000 to 5,000 t lots.

Eastbound transatlantic is one of those routes that was faltering, but has been given a fresh injection of benzene/toluene/xylene requirements which have boosted freights upwards by a couple of dollars per ton. We think a 5,000 t base oil cargo from the U.S. Gulf to Antwerp-Rotterdam-Amsterdam would cost around $47/t.

Space is a bit tighter from the U.S. Gulf to the Caribbean or east coast of Mexico, but freights are stable. An increase in the amount of ethanol and vegetable oil for export from South America should provide stimulus to owners to fix from the U.S. Gulf to Brazil. Currently, freights are around $43/t for 5,000 t of base oils from the U.S. Gulf to northern Brazil.

Europe
The Mediterranean has been busier this week, to the extent that some of the freight rates being done are surprisingly low. It is therefore clear that contractual volumes remain depressed, and even though there are more spot cargoes there is still ample tonnage available to deal with it. And this in spite of the number of ships that have taken advantage of the higher freights obtainable to get out of the area and go deep-sea.

May space is very tight to India and Asia, and freights are firmer by several dollars per ton. Lots of acid, vegetable oils, aromatics, pyrolysis gasoline and even base oils are moving east. Transatlantic is steady, but with no real fire.


Asia
The list of open ships in Asia continues to grow. Some aromatics traders have been looking at fixing benzene back to Europe in large slugs, but in order for the arbitrage to work, freights have to be $40 to $45/t – in effect, more like the palm oil freights. This may at least offer a lifeline to owners.

Already it is clear that ships are ballasting back to the Mediterranean from India. A timely 5,000 t cargo of base oils from the west coast of India to Turkey could net a freight of $45 to $50/t, and something like $35/t from Yanbu.

Most chemical cargoes from India and the Middle East Gulf are however directed towards Asia, where the prices provide greatest netbacks. Nevertheless, there are plenty of ships to choose from, and we could see 3,000 t of base oils from the west coast of India to Southeast Asia paying no more than $40/t, and probably around $55 to $60/t to ports in mid China.

Inter-Asian shipping markets are a little slower and numbers are down by a dollar or so.

Notes

Taking a break from the piracy situation off Somalia, lets look at some interesting statistics thrown up this week from China that go some way to helping us understand what is going on there.

Profits at Sinopec Corp. rose in the first quarter of 2009 to Yuan 11.22 billion ($1.64 billion), an increase of some 85.1 percent over a year ago. The company attributes much of the gains to domestic demand and growth.

Chinas petrochemical industry reported a growth of 26.3 percent month-on-month in March, although turnover at Yuan 498.4 billion ($73.06 billion) was down 8.4 percent. Profits for the five main petrochemical companies were up however by 160 percent in March compared with February.