Its been another disappointing week for ship owners. Cargo volumes have remained obstinately low across the globe, and more or less the same total number of ships has no employment this week as last week. A few unfortunate vessels have even sat out the whole week idling at anchor. Routes out of Asia have been hardest hit. For most of 2008, high demand in the West for Asian chemicals caused freights to rocket. This week saw as much as 10 percent knocked off freights on some routes back to Europe or the United States.
U.S. Gulf of Mexico
Not quite as many prompt vessels are reported open in the U.S. Gulf this week, but given the minimal number of cargo enquiries seen, there is no real change to the overall situation. There are good possibilities to pick up part-cargo space on vessels scheduled from the U.S. Gulf to the Caribbean. We do see resistance from ship owners to further freight reductions from the U.S. Gulf to Santos.
Some say levels for 10,000 ton cargoes should be close to $40/t. It will all depend on other opportunities to ship from the U.S. Gulf, but we feel some owners could be enticed south by vegetable oil cargoes from Argentina. Due to low water levels in the River Plate, the usual 30,000 to 40,000 t cargoes cannot be fixed, meaning vegetable oil traders are now looking for smaller ships, of 5,000 to 15,000 dwt capacity.
Transatlantic routes experienced a surge in biodiesel cargoes, probably in anticipation of duty increases in Europe. Nevertheless, there is still ample space both to Northwest Europe and the Mediterranean at unchanged numbers from last week. There has been a jump in the number of aromatics cargoes from the U.S. Gulf to the Far East, but freights of sub $40/t are achievable on 5,000 to 10,000 t lots from the U.S. Gulf to principal scheduled ports in the Far East.
Europe
Demand for ships is still at a low level, and tonnage of all sizes and descriptions can be found open in Northwest Europe and the Mediterranean, able to provide a January loading date. Were it not for a reasonably busy oil market, the situation in Northwest Europe would be much worse.
In the Mediterranean, vessels have been able to take advantage of a busier vegetable oil market out of the Black Sea, as well as a flurry on methanol and benzene/toluene/xylene cargoes, but otherwise business is still very slow. We see good possibilities to load base oils both West Mediterranean to East Mediterranean, and vice versa.
The same applies for cargoes to Nigeria, and we feel a level in the low-to-mid $70s/t on 9,000 t from the Baltic to Western Africa is representative.
Having seen some of the base oil fixtures from the Baltic to China, we feel vindicated in our assessment of $75/t basis 5,000 t from Antwerp-Rotterdam-Amsterdam to China. There have been a couple of over-age vessels on berth too that would have settled at lower numbers for those who would not need vetted tonnage. Chemical demand has been good from Northwest Europe to China in particular, and if this level of activity recurs over the next week, it may be harder to find space at this kind of freight.
Weve seen $40/t on 11,000 t of pyrolysis gasoline from the Eastern Mediterranean to Jebel Ali, and this is typical of the numbers being talked from the Mediterranean to the Middle East Gulf* or to India currently. We still assess a 5,000 t cargo from Antwerp-Rotterdam-Amsterdam to the U.S. Gulf as $40/t amid slightly improved demand for chemicals.
Asia
More signs are emerging of a slowdown in chemical demand within Asia prior the lunar holidays. Regional markets are soft, with plenty of open space. Space too can easily been found on export cargoes to the West. For example, a 10,000 t cargo from China to the Mediterranean can achieve $85/t, down at least $10/t from the previous week. More importantly, even smaller parcels of 4,000 to 6,000 t can be fixed at this level by taking advantage of part-cargo space on vessels already scheduled. Several such ships can be found within January, and more vessels are being delivered from shipyards during February and March, thereby keeping a lid on freight.
Palm oil charterers proved they could achieve high $60s/t on 10,000 to 15,000 t cargoes from the Melaka Straits to the Black Sea. The Middle East Gulf to India region saw a surge in chemical demand, but nearly all the cargoes are for February loading, which is of no use to those owners with prompt tonnage in the region. Were assessing 5,000 t from Iran to the Eastern Mediterranean as $70/t for February, and somewhere in the $60s/t for prompt.
Notes
Effective Jan. 23, the U.S. Coast Guard has announced restrictions on vessels arriving from Venezuela, after determining that ports in Venezuela are not maintaining effective anti-terrorism measures. The main requirements are for the ship to provide increased security while in port in Venezuela, including the posting of guards at all access points. Details of the enhanced security are to be passed to the U.S. Coast Guard prior arrival at a U.S. port, and depending on that assessment, armed private security guards may need to be provided during the ships call in the U.S. These restrictions will be imposed on any vessel that includes a Venezuelan port in the last five port calls.
The cost of the enhanced security measures will be borne by the ship owner, and consequently by the cargo charterer, thereby increasing the cost of delivery for Venezuelan exports into the United States.
*Middle East Gulf is the international shipping industrys preferred name for the body of water known both as the Persian Gulf and the Arab Gulf.
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.