U.S. Gulf of Mexico
There will be more ships open in the U.S. Gulf in July, but only towards the end of the month. That does leave a large hole that has to be filled by just a handful of spare vessels.

Demand is not excessive so far, although we do note that most routes are maximising contractual volumes again, cutting out a certain amount of capacity that could be used for spot cargoes. The U.S. Gulf to the east coast of South America is a good example.

Spot demand is fairly feeble, but there is not that much space left uncovered. Assuming it does not tighten further, we suggest a 5,000 ton cargo of base oils from the U.S. Gulf to northern Brazil could obtain a freight of low $40s/t.

U.S. Gulf to the Caribbean and to Mexico are fairly snug routes.

U.S. Gulf to Asia has some July space left, but owners still prefer to keep clear of Asia if they can find better alternatives, which means that rates can be fairly high. In some ways, smaller parcels are easier to fix. Several 5,000 to 6,000 ton parcels were worked from the U.S. Gulf to Korea at $60/t, yet a 20,000 ton methanol cargo was fixed from Houston to China with a freight of $60/t or $70/t, depending on which side is reporting the fixture. The reason is that there are still small pockets of space out there, but not many ships for bigger cargoes.

Transatlantic eastbound is hard to fathom. There is not much July space, yet freights are falling, with a 5,000 ton cargo from Houston to Rotterdam now paying down into the mid-$40s/t, even though demand is fairly robust.

Europe
The Mediterranean market is the area that has been most busy within Europe. In the North Sea and Baltic, contractual demand is flagging, causing owners to become more aggressive on their spot market rates. Interestingly, demand to ship chemicals and base oils into the Mediterranean is still fairly buoyant, allowing owners to keep freights on a strong footing. Expect to pay around $40 to $45/t for a 3,000 to 4,000 ton cargo from Antwerp-Rotterdam-Amsterdam to the west coast of Italy, for instance.

Not much is happening northbound out of the Mediterranean, and freights are competitive, but sadly base oils are not commonly shipped on this route these days.

Transatlantic westbound is neither busy nor quiet, but somewhere in-between. Rates for 5,000 ton cargoes from Antwerp-Rotterdam-Amsterdam to the U.S. Gulf are steady at around $35 to $36/t.

Europe-to-Asia is certainly slowing, or at least there are fewer larger parcels available, even if there is a plethora of small bits and pieces. It is the small parcel trade that owners are making their money on these days. A 1,000 parcel from Antwerp-Rotterdam-Amsterdam to mid-China can easily fetch $130/t, and we know of some that have elicited offers in the $170s/t.

Europe-to-India and the Middle East Gulf is certainly a very busy route, with plenty of base oils quoted, competing against the multitude of chemicals, acids and vegetable oils that are all currently vying for space. A 5,000 ton cargo of base oils from the Black Sea to the west coast of India can easily cost $100/t now, compared to $75/t a few weeks ago.

Asia
Palm oils, acids, chemicals, biodiesel and molasses are all starting to reappear on the menu, which is a welcome sign to ship owners who have been starved of cargo for months. There are even a couple of base oil enquiries mixed in too. In addition, the trades for chemicals into India seems to be a little more active, and owners are using this as a stepping stone to relocate the ships back in the West.

Freight levels are still very attractive for traders looking to top off ships with base oil, with rates estimated to be in the $70s/t for 3,000 ton lots from Korea to Turkey, for instance, or $50/t for 5,000 ton lots from Korea to Rotterdam. There is also space to the U.S. Gulf, and numbers are several dollars lower for a 5,000 ton shipment. There is plenty of open space in the Middle East Gulf-India region too, in case of possibilities to ship from Iran to either Europe or Asia. A 5,000 ton load to Turkey from Iran would fetch around $47/t.

Notes
Acts of piracy are not confined to the seas off Somalia. In an incident on July 4, a tanker was boarded off the Nigerian coast and six crew members were taken away as hostages. The vessel is the Eitzen-controlled Sichem Peace, which sailed from Havre on June 18 with a cargo of base oils for West Africa. The ship was actually 18 miles off Koko when the pirates struck. Unlike Somalia, kidnapping in Nigeria is more of a political weapon, and the ship was allowed to proceed. It is hoped that a speedy agreement is reached to allow the release of the crew.