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November 7, 2018

Volume 1 Issue 46

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SSY Base Oil Shipping Report

A couple of routes out of the United States have moved up a gear this week, and prompt space is gradually disappearing from the Asian market. Europe, however, is inundated with ships and rates remain weak.

U.S. Gulf

Owners have been reporting healthier contractual nominations along the Far East route for a little while already, but, because the spot market was so dull, it has been difficult to assess spot freight levels. With an influx of demand this week, however, it has become much easier to discern. Owners have realized that space is scarce for the remainder of November and are asking rates in the mid $60s per metric ton for 5,000-ton parcels from Houston to Mainport Far East, and will perhaps accept levels in the mid- to high- $50s/t, which is a massive leap from before.

The transatlantic eastbound market has been steadily tightening over the past couple of weeks, and here too, further freight increases are likely. Requirements include styrene, methanol, paraxylene, vinyl acetate monomer, cumene, biodiesel, metaxylene, caustic, glycols, ethanol, lysine and vegetable oil. Twelve thousand tons of base oils loaded from Pascagoula, Texas, at the end of October to Lagos, Nigeria, for a rate believed to be around $800,000.

There has been very little happening within the Caribbean over the past week, and idle ships are easy to identify. News has yet to be received with regards the recent base oil tenders. Instead, there has been some caustic heading over to Mexico, and traders are looking at 18,000 tons of ethanol from the U.S. Gulf to Jamaica and Colombia.

Ethanol continues to make its way down to Brazil from the U.S. Gulf, with further requirements still uncovered. Space seems to have tightened since both base oil requirements that were quoted to Brazil last week from the U.S. Gulf remain uncovered, and, in one case, charterers are looking at ways of widening the loading dates to attract more vessels, and in the other the quantity has been increased to 8,000 tons.

Base oils are firmly back on the agenda along the route into India this week. There is a sales tender for up to 12,000 tons of base oils from Paulsboro, and traders are looking at taking all, or part of it to India. There are also enquiries to send base oils from the U.S. Gulf to India in November. In addition, there are cargoes of ethanol, acrylonitrile, glycol ethers, mixed xylenes and styrene.

Europe

There remains a lot of prompt open space in the North Sea and Baltic area. A few owners have managed to work their vessels through until mid-month, but most ships are still open before mid-November. Biodiesel has had a bit of a surge in demand, and other products that are usually associated with the fuels business, such as methyl tertiary butyl ether, bio-methanol and ethanol have also been more visible. Base oils have been interesting because there have been a couple of fixtures of around 6,000 tons each, which have been booked from Gdansk, Poland, into Riga, Latvia, while other movements out of the Baltic have been muted.

Things have been a little busier southbound into Turkey, with products such as acetic acid and ethyl acetate. Parcels of orthoxylene, paraxylene, benzene, styrene and vinyl acetate monomer have been logged, and there has been a small amount of base oils moving too, but the primary product has to be biodiesel, with cargoes ranging from 3,000 tons right up to 12,000 tons to assorted destinations in the Mediterranean.

As with the previous week, the northbound route is not busy, yet there are cargoes heading north. Eleven thousand tons of pyrolysis gasoline fixed from Poti, Georgia, to Antwerp-Rotterdam-Amsterdam, for instance. Bio-naphtha was quoted from Venice, base oils from Greece, alkylate from Augusta, Sicily, urea ammonia nitrate from Annaba, Algeria, and benzene from Constanza, Romania, just to name a few. Five thousand tons of base oils were looking for a coaster to take the cargo from Augusta to Rotterdam for transhipment to Durban, South Africa.

There are still too many idle vessels within the Mediterranean this week, putting severe downwards pressure onto rates. Three thousand tons of MTBE from  Marseille-Fos, France, to Livorno, Italy, saw a ship being worked for a lump sum figure in the €40,000s, for example, when the usual number is in the €70,000s. A couple of base oil cargoes were quoted from Livorno and Cartagena, Spain, this week, but otherwise base oils seem muted. Clean petroleum is also rather dull in the small sizes within the Mediterranean, much to owners’ disappointment, but with mild weather prevailing owners cannot rely on it to ease some of the pressure.

There are a couple of prompt ships that still have space along the transatlantic route, and freights may have eased back slightly from the low $40s/t that were being booked for 5,000-ton parcels from Rotterdam to the U.S. Atlantic Coast, but only by $1 to $2/t. Traders still express interest in aromatics westbound, and levels may be sustained for another week.

Styrene has quieted down out of Europe and into the Far East, and even the prompt lifting from Tarragona, Spain, ended up staying within the Mediterranean rather than be sent to China. There are, however, a number of requirements still being circulated, including a possible base oil shipment from Rotterdam to either Singapore or the Far East. Owners will not risk going on berth unless there is a good chance of filling up their ships, and so it may be that only the scheduled carriers will ultimately be the ones fixing the smaller parcels and retaining current rate levels.

Space can still be found for November on both scheduled and unscheduled ships along the India and Middle East Gulf route, keeping rates on an even track. Vegetable oil has been fairly busy, and there have been cargoes of acid, aromatics, acrylates, hexane and so on. Base oils are not busy though.

Asia

Domesticspace continues to tighten across Asia, and, while there are still a few prompt positions knocking around, most owners have booked into the second half of November, and a few are now showing no space until December. The intra-Far East route is busiest, with numerous cargoes of aromatics being sent to Taiwan and China. Owners are also looking to cover the higher cost of low-sulphur bunkers that are mandatory for large parts of China, and this is starting to be felt in terms of freight. Northbound too is registering an increase in freight, with mid- to high $40s/t being seen for 3,000-ton parcels from Singapore to mid-China. Base oils are reasonably active out of Korea as well as some parcels being seen from Southeast Asia. Three thousand tons of base oils are quoted from Cilacap, Indonesia, to Nantong, China, for end November, for instance, the previous lifting having been booked for end of October loading at $78/t.

Traders have been toying with possible benzene cargoes on the transpacific export route for December, but nothing firm has emerged so far. The market to Europe consists mostly of different forms of biodiesel, or feedstock for biodiesel, most of which remain uncovered. Freights are still quite strong to Europe from Northeast Asia, with not so many vessels actually on berth. Traders are also considered sending caustic to Europe, since they are unable to sell it to India. Rates from Southeast Asia would seem to be decreasing, given that 8,000 tons of base oils from Malacca, Malaysia, to Antwerp were allegedly worked in the mid- to high $50s/t, which is substantially lower than the last couple of shipments.

The regional market along the India and Middle East Gulf route looks slower this week, probably because of Diwali. Base oils are still under consideration from Sitra, Yanbu, Saudi Arabia, Al Ruwais, U.A.E., Karachi, Pakistan, and Iran, but with U.S. ramping up sanctions against Iran fewer and fewer owners are able to consider taking Iranian cargoes. Eastbound is not particularly busy either, while westbound appears to be steady.

Adrian Brown is a senior market analyst for chemicals and base oils with SSY Shipbrokers, London, can be reached at fix@ssychems.com or +44 12 0750 7507.  Information about SSY can be found at www.ssyonline.com. In the Houston office, Steve Rosenthal of SSY's Chemical Tanker Department can be reached directly at +1 (713) 652-2700 and Jordi Maymi in Singapore can be reached at +65 6854-7127.