SSY Base Oil Shipping Report


The global shipping market took time out for the duration of the European Petrochemical Association Conference in Berlin last week and is now only slowly trying to sort itself out. In terms of fixing, no single region or route was that busy over the past week.

U.S. Gulf of Mexico
Freight rates on all the major trade lanes out of the U.S. Gulf rolled over from the previous week without any significant changes. Space tends not to hang around in the area, however, as transatlantic eastbound is producing quite a lot of interest in shipping styrene and aromatics to Europe. There has even been a resurgence of biodiesel, some of which is geared towards Eastern Europe.

Another area which tends to fill out fairly quickly is the U.S. Gulf-to-Caribbean trade, mostly with off-market cargoes. In contrast, U.S. Gulf to South America is totally flat, with very few cargoes quoted. U.S. Gulf to Asia has seen traffic slow down too, although there are still occasional parcels of aromatics, ethylene dichloride and biodiesel. Opportunities to pick up competitive rates for October lifting can still be found.

The EPCA conference is an important event in the petrochemical calendar as it forms the basis for discussions between buyers and sellers going forward. Historically, the results of the negotiations are transformed into shipping business that usually endows the fourth quarter with additional freight opportunities.

It will take a further week or two for these to materialize, and only then will we be in a better position to judge whether demand is really picking up, or whether the oversupply of tonnage will continue to cripple the shipping industry. Most experts lean towards the latter conclusion, and the mood among the shipping folk at EPCA was decidedly glum.

Looking at the European market today, there are plenty of ships able to perform most requirements throughout Europe. Rates have not changed a great deal however as owners are now more inclined to walk away from business that does not cover costs. However, when a ship does have completion space – say, into the Mediterranean – then a completion cargo can often be secured at a competitive rate.

Transatlantic westbound is poor, and there are several ships for example that would accept $30 to $31 per metric ton for 5,000 tons of cargo from Antwerp-Rotterdam-Amsterdam. There is space too from the Mediterranean to South America that could be utilized with a base oils cargo. Expect to pay around $50 to $55/t for 4,000 to 5,000 tons from the West Mediterranean to Brazil.

Trade from Europe to Asia has evaporated, leaving behind plenty of October space. Numbers in the $60s/t are starting to show up for bigger cargoes to China. For example, 3,000 tons of base oils from Antwerp-Rotterdam-Amsterdam to scheduled, principal ports in China could fetch from the high $70s to low $80s/t if the dates match one of the scheduled sailings. Numbers into India are also flattening, and it may be possible to fix a 3,000 ton parcel from Antwerp-Rotterdam-Amsterdam to Mumbai in the mid $70s/t.

Asia has yet to see any new surge in demand following Golden Week in China, meaning that there are plenty of small ships to be found to carry the parcels that criss-cross the Asian region.

Exports to the West too took a bit of a dent and have yet to see much recovery apart from biodiesel and acid cargoes. Most other grades are either small, sophisticated parcels, or larger lots of palm oil. Some new buildings have started to appear on the scene from yards, looking to reposition to the West, in case there are base oil cargoes around that do not require approvals.

The Middle East Gulf and India regions have been steadily picking up pace, both east and westbound, but rates have peaked for now. There are still ships available too that could take some smaller parcels back to the Mediterranean or Europe.

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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