Most markets have again registered a slight increase in the amount of business seen over the past week. The additional volume, however, has not been significant enough to influence the freight levels so far. Supply of tonnage in most areas of the world is still plentiful, and ship owners dare not risk inflating their rate ideas whilst there is so much open space around.
It would need a combined rise in demand across the oil, chemical, vegetable oil and acid sectors to draw off enough of the surplus tonnage to truly have an upwards impact on freight markets. Of these sectors, only the acid and chemical markets have become fractionally busier. The oil markets remain depressed. Average earnings for a medium range tanker today (37,000 dwt) are $18,500 per day. A year ago, the levels were $23,500/day. Coastal vegetable oil markets are livelier, but overall vegetable oil demand remains depressed and stock levels are high.
U.S. Gulf of Mexico
There are not quite as many ships fully open in the U.S. Gulf these days for truly opportunistic fixing. A couple remain resolutely stuck in the Caribbean, and a couple of others are making their way across to the U.S. Atlantic Coast from Europe, which will give some end-of-February loading opportunities. But the really spot/prompt space has gone. Scheduled space however is easier to find, and there are sufficient ships with open space along the main trade lanes to provide cover for most requirements. Rates are unchanged into Mexico, the Caribbean and South America, but perhaps up by a dollar or two to Europe and Asia. Aromatics seem to be the main commodity outbound at the moment, and material can move either to Europe or Asia.
Europe
Activity levels continue to strengthen in Europe, but finding suitable space on inter-European business is rarely a major issue. With a certain amount of flexibility over timing, nearly all cargoes can quickly be fixed. We still sense a certain willingness among owners to accept current freight levels, at least for now.
There are good possibilities to snap up remaining space on ships heading south into the Mediterranean from Antwerp-Rotterdam-Amsterdam. We believe $65 per ton may work for 3,000 tons from Antwerp-Rotterdam-Amsterdam to Marmara. Were the same cargo to load from the Iberian Peninsula, we believe the freight would be around $40/t. Several ships can offer on February cargoes from the Black Sea with numbers around $65 for 3,000 t to Antwerp-Rotterdam-Amsterdam.
Transatlantic freights are assessed as unchanged. Several ships loading acids and other chemicals and base oils from Northwest Europe or the Mediterranean to the Caribbean and South America have completion space to offer. Northwest Europe to Asia is busier, but we see interest from several ship owners on 2,000 t cargoes from Antwerp-Rotterdam-Amsterdam to Ningbo in the low $80s/t.
The flow of pyrolysis gasoline, acids and vegetable oils, especially from the Mediterranean and Black Sea, continues to gather speed, but mostly at unchanged freights. We have however heard of some higher freights being achieved on 6,000 t of vegetable oils loading in the Black Sea for the west coast of India, up from the $50s/t to mid $70s/t.
Asia
Cargo volumes continue to grow on Inter-Asian trades. However, there are an incessant number of ships coming out of the shipyards, which has the effect of undermining freight levels locally. Deep-sea freights back to Europe and the United States remain under pressure from the poorly performing palm oil markets, and we have seen freights of $90 to $95/t talked on 2,000 t cargoes from Korea to the Caribbean. From Korea to Rotterdam, a 5,000 t cargo would see a level of about $90/t as well.
The number of ships being fixed into India and the Middle East with all this acid, pyrolysis gasoline and base oils means that there is a surplus of tonnage in the region. Even though chemical demand may be strong, we believe that the extra ships will probably create a surplus of space and which could result in lower freights out from India and the Middle East Gulf later this month.
Notes
The increasing naval presence off the Somali coast is causing a number of ship owners to rethink their decision to avoid the region and only send ships via the Cape of Good Hope. Although unofficial so far, we understand some of the more prominent owners will begin sending ships via Suez again, but as with some of the owners already sailing via Suez they will incorporate a piracy clause into the charter party. At this stage, most owners are choosing their own wording, but we suspect that it will only be a matter of time before something more coordinated is developed, perhaps by one of the industrys governing bodies.
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.