The peak holiday season in Europe has induced a kind of lethargy that has afflicted some, but not all, European coastal trades. The market in the Americas is mixed too. Some routes are doing well with plenty of activity, while others languish. The pace of business in Asia continues to accelerate, with higher freights being seen on certain routes.
U.S. Gulf of Mexico
As expected, there are now a number of tankers that are open prompt in the U.S. Gulf or Caribbean, but there are still not that many that they affect the rates greatly. Where they have been felt is in the U.S. Gulf-to-Caribbean markets, which have seen rates weaken slightly. Some are also interested in sailing down to South America, but until exports start to pick up from Brazil and Argentina these vessels will likely hang around the Gulf-to-Caribbean trades.
The route from the U.S. Gulf to Northwest Europe has become busier with more chemical cargoes, which has caused freights to lift into the low-to-mid $50s per ton for 5,000 ton cargoes from Houston to Antwerp-Rotterdam-Amsterdam. Rates into the Mediterranean are quite firm too, and we have heard of $100/t being fixed for 1,000 ton cargoes from the U.S. Gulf to Alexandria.
Rates into the Far East however continue to decline, even though enquiry levels are actually fairly strong. What seems to be happening is that much of this enquiry fails to go much beyond simple enquiry stage. Consequently, owners become frustrated with the amount of open space they have and rates go down. We currently assess a 5,000 ton cargo of base oils from the U.S. Gulf to principal scheduled ports in the Far East as being around the mid-to-high $50s/t. With far fewer sailings and heavier contractual commitments the U.S. Gulf to India route still commands numbers in the mid $90s/t for the same 5,000 ton cargo.
Europe
Most ships trading in the North Sea and the Baltic areas have a reasonable amount of work, occasionally allowing firmer freight levels to be done. However, the market into the Mediterranean has moderated, and we now see rates for 3,000 tons of base oils from Antwerp-Rotterdam-Amsterdam to the west coast of Italy as being around $40 to 45/t, and to Turkey the levels would be around $60 to 65/t.
There are plenty of ships open in the Mediterranean, especially the western Mediterranean, and finding a suitable candidate for base oils into Turkey or Greece would not be a problem. There are a few more chemical cargoes such as methanol and caustic starting to reappear from the Black Sea which might give some small competition for base oils, but generally these base oil cargoes are carried on older ships in the fleet.
Transatlantic is not so active, and plenty of space can be found, even from the eastern Mediterranean. A 5,000 ton base oil cargo from the eastern Mediterranean to the U.S. Gulf would probably command around $60/t currently.
Europe-to-Asia trades are slack, but with few owners willing to risk going back to Asia, rates are virtually unchanged. Demand into India and the Middle East Gulf is still strong with chemicals, vegetable oils, acid and base oils. A 5,000 ton cargo from the Baltic in this direction would cost around $100/t.
Asia
Chemical and palm oil volumes are rising, while at the same time there are fewer open positions in Asia. The result is that freight levels have again recorded another slight jump. We see 10,000 ton palm oil cargoes from the Malacca Straits to the west coast of India as being back into the $20/t territory again. Freights for the larger lots to Europe have gone up, but only marginally as there are still plenty of large new tankers coming from shipyards in Asia on a daily basis.
Benzene trades to the United States too have captured some ships that might have been tempted into the palm oil market.
From Ulsan to Rotterdam, 5,000 ton cargoes are creeping towards the mid $50s/t, although less than that can still be achieved right now. The India-to-Middle East Gulf routes have quickened the pace too with many smaller chemical cargoes quoted. Rates for 5,000 tons of base oils from Iran to Korea or main ports in China are pushing into the $50s/t, an increase of some $5 to $6/t.
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.