The spot market enjoyed a busier week in terms of cargoes quoted, but the overhang of tonnage, especially in Europe and the United States, means that there are still ships left behind without work. Possibly the most successful of regions has been Middle East Gulf to India, where demand continues to recover.
U.S. Gulf of Mexico
There has been a fresh injection of aromatics cargoes from the U.S. Gulf to Northwest Europe, but it has not been sufficient to stop rates from sliding by another couple of dollars. One of the problems has been that the other major trade lanes out of the U.S. Gulf have slowed to a crawl, and ships that might take cargo to South America, for example, have resorted to trading on the transatlantic route instead.
Apart from some urea ammonia nitrate and ethanol cargoes from the U.S. Gulf to the east coast of South America, there has not been much else southbound, and we see levels for 5,000 ton cargoes from Houston to Santos slipping to around $36/t.
U.S. Gulf-to-Caribbean seems stable, but U.S. Gulf-to-Asia is becoming very quiet. Numbers here for 5,000 tons of base oils from Houston to main ports in the Far East have dropped below $55/t for October shipment. Space can even been found from the U.S. Gulf to India in October, and levels in the low $90s/t are probably achievable for 3,000 tons.
Europe
We have seen quite some cargo quoted throughout Europe the past week, but in spite of the extra volume we still hear many examples of cargoes that attract 10 to 15 offers from ship owners. Freight rates are at best stable in the region, but it would be easy to envisage further slippage as owners give ground in order to get their vessels moving.
That said, it is not an entirely gloomy picture. Some owners have managed to fix forward so that they have a breathing space of 10 to 15 days. If demand continues to grow over the next week or so, some of the more desperate vessels may secure employment and the market may earn itself a respite. However, as one of the major petrochemical conferences is about to start in Berlin over the weekend, it is unlikely that too much new business will be generated.
Transatlantic westbound produced some quotations of aromatics, gasoline components and caustic, but space is plentiful and rates remain weak. Europe-to-Asia has been slow, but there have been a reasonable flow of cargoes to India and the Middle East Gulf, such as pyrolysis gasoline, acids, base oils and vegetable oils, that rates to these areas are almost underpinning rates to Asia. We see a 5,000 ton cargo from Rotterdam to Mumbai paying almost the same as 5,000 tons to Taiwan or Korea in spite of the extra distance.
Asia
Inter-Asian markets saw freights reduce even further, in spite of the approaching Golden Week in China that had been expected to boost demand beforehand. However, trade into India and the Middle East has been fairly brisk on palm oils, solvents and aromatics. There have been a few tentative gestures at moving benzene/toluene/xylene to the U.S. Gulf in October, although nothing has been fixed so far that we have heard.
Trade to Europe too has been mostly along the lines of smaller sophisticated parcels. The routes that have seen more activity have been those from India and the Middle East Gulf, both east and westbound. Rates have notched upwards by a dollar or so amid tightening space.
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.