SSY Base Oil Shipping Report


The long holiday weekend meant a quieter week in Europe, while the Americas enjoyed a reasonable spell of activity. Asias market remains overtonnaged, but the threat of rising bunker fuel prices could put a stop to further rate erosion for the moment at least.

U.S. Gulf of Mexico
With relatively few cargoes being imported in the U.S. Gulf, the pool of ships available for any cargo in any direction has become smaller. Taking it a step further, most owners who do have ships in the U.S. Gulf are cautious about sending them to Asia or India-Middle East Gulf for fear of them not finding adequate employment afterwards. This then makes it harder to fix from the U.S. Gulf in those directions.

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That said, there is scheduled space from the U.S. Gulf to Indi, and we have seen rates for 6,000 to 7,000 ton cargoes just under $80 per ton. The U.S. Gulf-to-Asia route is also seeing more interest in shipping chemicals and base oils. Space is tight for prompt loading in this direction, but does ease later into June. Two thousand ton parcels of base oils from the U.S. Gulf to China will probably cost around $100/t.

There is quite a lot of space open on the U.S. Gulf to east coast of South America service, and 5,000 tons of base oils from the U.S. Gulf to northern Brazil would cost not much more than $42/t. The trade in ethanol back out of Brazil is picking up, making space tighter, although there is a lot of ethanol heading into the Caribbean. This could present some opportunities to ship small volumes of base oils from Brazil into the Caribbean as a part-cargo. There are also ethanol shipments heading to India and West Africa, again giving some combination possibilities for base oils.

Space from the U.S. Gulf to the Mediterranean is limited this month, but there are some gaps for cargoes going from the U.S. Gulf to Antwerp-Rotterdam-Amsterdam.

It was a thin week for ships in the North Sea and Baltic, without many of the regular cargoes such as fatty acid methyl ester or aromatics to help sustain the fleet. There have been rather more enquiries into the Mediterranean, however, including base oils from the Baltic.

Turkey is appearing as a big base oil buying market right now, and it should be possible to book 3,000 tons of base oils from Antwerp-Rotterdam-Amsterdam to Turkey for around $50/t.

As with the Americas, demand for space into Asia and India-Middle East Gulf from Europe is fairly strong. A 5,000 ton cargo of base oils from Antwerp-Rotterdam-Amsterdam to China would command around $95/t, and you would need to add at least $30/t for loading in the Baltic.

We see several traders vainly seeking tonnage for base oils into India and the Middle East Gulf from Europe, but space remains tight for June. A 5,000 ton cargo of base oils from Antwerp-Rotterdam-Amsterdam to the west coast of India would pay in the mid $70s/t or so right now.

Westbound transatlantic is flat with ample space available. There are one or two interesting positions going across, with one ship having space from the Baltic to South America in June.

The list of open ships in Asia is impressive, which does little for the owners who have ships waiting in the area, but which does make it interesting for charterers who wish to move base oils out of Asia to Europe, the U.S. Gulf, India or even to those destinations that would normally be too prohibitive on freight. However, freight levels do appear to have bottomed out since bunker costs are a major cost when performing long-haul cargoes. We are finding more owners who are willing to stick it out locally rather than permit further rate reductions.

There have been some benzene fixtures from Korea to Antwerp-Rotterdam-Amsterdam that have set the benchmark, with numbers seen around $50 to $55/t for 5,000 ton lots.

A lot of open vessels are congregating in India and the Middle East Gulf too since the inbound trade is busy. There is however not so much spot business back out again afterwards. We believe that 5,000 tons of Iranian base oils to Turkey could find space at $50 to $55/t. Rates on inter-Asian parcels have risen by a dollar or so, but for larger lots of 5,000 to 10,000 ton cargoes there is no change.

Just as the naval coalition forces were congratulating themselves on the recent success they have achieved at combating piracy attacks in the Gulf of Aden, there were reports this week that a chemical tanker was attacked and fired upon in the Red Sea, not far from Djibouti.

Reports suggest that the ship was the Stolt Strength, which had been a victim of an earlier hijacking last November and which was only released towards the end of April. Until now, this area has been mostly free from attacks, and it is the first time that a ship in this vicinity has been fired upon and damaged.

In a report in Reuters, the UN Special Envoy to Somalia, Ahmedou Ould-Abdallah was in a congratulatory mood, saying that over 100 pirates were currently under arrest. Statistics however for this year show that there have been over 100 piracy attacks, with more than 25 successful hijackings.

Somalias Foreign Minister has called for funding for an effective Somali coastguard, and in a ceremony last Friday the coalition forces of the United Nations, NATO, EU and United States signed a declaration of support for such action. However, the problem of piracy is a migratory one, as can be seen by the incident in the Red Sea, and may need more than just a Somali coastguard to ensure safe passage for all ships in the region.

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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