Contractual business from the Americas is beginning to increase for the balance of the year, although spot volumes remain depressed. Europe is totally flat with multiple ships open in every sector. Asian domestic markets are slowly seeing some growth, but rates tend to be unchanged.
U.S. Gulf of Mexico
Main routes such as U.S. Gulf to Asia and U.S. Gulf to South America have registered an increase in contractual demand, mostly inspired by the seasonal need to have material out of storage by year end. Spot trades are soft, however, and open space can be found.
A 5,000 ton cargo of base oils from Houston to main ports in the Far East could attain a rate of $50 per ton or less, if arranged on scheduled ports. Rates into Brazil are hovering around mid $30s/t for a similar-sized cargo.
Eastbound transatlantic markets have stalled after several busy weeks, and a growing number of ships are showing open with space back to Europe. Rates are likely to weaken therefore off the present levels of mid $40s/t for 5,000 ton cargoes from Houston to Rotterdam.
Europe
Sadly, none of the excitement from previous weeks remains, leaving Europe once again full of empty ships.
End user demand may be recovering slightly, manifested by the number of plants that were closed for commercial reasons now beginning to restart production. However, the shipping industry is clearly burdened by too many vessels, clogging most of the European coastal routes with excess tonnage and keeping freights at rock bottom levels.
Westbound transatlantic is poor. Demand for aromatics has virtually ceased, causing freights to edge lower, and in some cases it may be possible to break the $30/t barrier for 5,000 ton cargoes from Antwerp-Rotterdam-Amsterdam to the U.S. Atlantic coast.
Like a stream of refugees, ships are flooding onto the Europe-to-Asia markets. Unfortunately, demand into the Far East is poor. There are more cargoes into the Middle East Gulf and India, such as pyrolysis gasoline and base oils, but we are seeing rates fall below even $40/t for 15,000 ton cargoes, and 5,000 ton cargoes dropping into the $50s/t zone.
Asia
Chinese demand for aromatics and styrene is fairly constant, providing a reasonable flow of cargoes for the smaller ships plying the inter-Far East coastal trades. There are some base oils and caustic movements to take ships back into Southeast Asia, and some aromatics and base oils to be carried northwards again. Chemical exports to Europe and the United States, however, are confined chiefly to contractual business or the occasional sophisticated parcel.
Demand for palm oil is fairly strong again with numerous cargoes seeking space into India, Pakistan and China. But a consequence of this is too many ships open again in the Middle East Gulf and India. With demand for bulk commodities such as methanol having peaked, it has become harder for ship owners to send their ships back to Europe. A 5,000 ton parcel of base oils from the Middle East Gulf to Turkey, for example, could attract tonnage in the high $40s/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.