November 23, 2018
Volume 7 Issue 7
SSY Base Oil Shipping Report
The gradual tightening of space out of the United States continues this week, and Europe looks a little busier too. Asia, however, is slower in parts, and the customary year-end build-up is missing.
The majority of requirements being aired this week along the Far East route are very large and are mostly comprised of methanol and ethanol. Traders have been checking rates on styrene too, but the main spot activity has focused on the big homogeneous cargoes. Space is being snapped up by contractual partners. But, at some point they can be expected to have nominated everything, and then it will be interesting to see if spot charterers re-surface, or whether owners then have to scramble to find enough volume to fill out the last December space.
The eastbound transatlantic route put in another strong performance this week, with numerous cargo possibilities seen. Products such as paraxylene, glycol, styrene, methanol, ethanol, biodiesel, caustic and vegetable oil have either been fixed or are being studied. For a while, benzene was even being attempted, but none is thought to have fixed so far. Four thousand tons of base oils from Houston to Le Havre, France, are under consideration too.
The strength of the large tanker clean petroleum market is filtering down into the small tanker market as traders look to find ways of moving cargoes into the Caribbean. Space is a bit tighter in this area now. Caustic, ethanol and urea ammonia nitrate are among the remaining popular commodities being seen quite frequently.
Ethanol does sometimes make an appearance on the east coast of South America trade lane, but it is not as common as previously. Caustic has begun to emerge, and base oils too. The prompt requirement for 3,500 tons of cargo to Brazil was covered, and already the next lifting of 3,500 tons is seeking December space. Cargoes of base oil are also being quoted back out from Brazil, with 2,000 tons looking to ship to the U.S. Gulf, and a bigger parcel is asking freight indications into the Mediterranean.
There is not a great deal of space remaining on the route into India. Ethanol, styrene, base oil, neodene, butanol and acrylonitrile are the primary commodities being shipped.
Overall, it was a disappointing week for owners in the North Sea and Baltic market, with activity stalling instead of growing. A few vessels have made it through to the end of the month, but the bulk of the fleet still needs one or two voyages more to accomplish that feat. Low water levels on the Rhine continue and, as a result, many cargoes are not there as usual to be shipped. Base oils were reasonably active, however, with a couple of shipments fixed out of the Baltic, and a couple more going back up into the Baltic, whilst a couple of intra-North Sea movements were detected in addition.
With the exchange rate looking more stable, Turkish customers have been out buying chemicals and even a few base oil parcels were done from northwestern Europe on the southbound route. Demand is otherwise quite varied, with anything from methyl tertiarybutyl ether to aromatics and biodiesel being booked.
Aromatics generated some northbound traffic through the week, with pyrolysis gasoline booked from Augusta, Sicily, and Sines, Portugal, but more interestingly there were several cargoes of base oil fixed, including one from the Black Sea and another from Spain, as well as several further requirements seen to Berre, France, from Greece, Spain and Portugal. It would appear that rates are stable.
A couple of base oil possibilities were noted to different places in North Africa this week, rounding off what owners describe as a busier week within the Mediterranean. Cargoes included parcels of MTBE, caustic, styrene, pyrolysis gasoline, benzene, urea ammonia nitrate, cumene, biodiesel and vegetable oil. Rates do not seem to have altered greatly, although some of the regular movements did record a slight increment in freight levels.
It has not been a particularly remarkable week along the transatlantic route, yet once again, owners who display determination have managed to drive through substantial increases, even on larger cargoes. In one case, a 30 percent increase has been recorded on a 10,000 tons of cargo, showing that sometimes loading dates are worth more to a charterer than spending a bit more on the freight bill. Cargoes this week include toluene, sulphuric acid, urea ammonia nitrate, wax, normal paraffins and aromatics. It is believed that 7,000 tons to 8,000 tons of base oils were booked from the Mediterranean to Cuba.
Styrene was again booked from Gonfreville, France, to China, with further enquiries noted from Antwerp-Rotterdam-Amsterdam and Tarragona, Spain. However, most ships scheduled along the Far East route do not have sufficient space remaining. Similarly, 5,000 tons of mixed xylenes continues to be seen from Antwerp-Rotterdam-Amsterdam to Mainport Far East. However, 18,500 tons of base oils from Fawley, U.K., and Augusta to Singapore were booked at a very competitive level said to be in the mid $50s per metric ton. Brokers are running around trying to drum up interest in long-term shipments of aromatic extracts from various places in the Mediterranean to Southeast Asia.
It is rather quiet on the parcels trade into India and the Middle East Gulf at the moment, but there have been some larger lots of vegetable oil and acid noted. A cargo of mixed xylenes was booked from Sarroch, Italy, to India.
Falling crude and feedstock prices on the domestic route caused many buyers to hold off from re-stocking, as they wait to see how low prices will get before stepping back in. Consequently, the freight market has been slower than expected. A few owners still have ships that are open this side of December, even up in Northeast Asia, which is usually one of the busier sector. Base oils have, however, been fairly busy from Korea, with a number of requirements noted into China, Taiwan and Southeast Asia. The arbitrage to sell benzene into China still looks to be open from Korea, and there have been parcels of paraxylene, styrene and ethylene dichloride in that direction too. Southbound demand is steady. Northbound space has become fairly tight, well into December, with cargoes of pyrolysis gasoline, paraxylene, benzene, base oil and molasses noted. Rates appear to be creeping up, and it is the same within Southeast Asia, too.
Traders have set their sights on benzene once more on the transpacific export route, with cargoes noted for December. The market to Europe is cluttered with various grades of biodiesel, as well as some caustic and a number of small chemicals parcels into the Mediterranean. Three thousand tons of base oils were claimed to have been fixed from Pyongtaek, South Korea, to Haifa, Israel. Rates on both routes are stable.
Base oils are once again active in the regional markets along the India and Middle East Gulf route. As usual cargoes can be seen from Al Ruwais, U.A.E., Sitra, Bahrain, and Karachi, Pakistan, into India, not forgetting an enquiry for 28,300 tons of base oils from Yanbu, Saudi Arabia, and Jeddah to Mumbai for December. The charterers would like this cargo split onto two vessels. Eastbound appears to be busy. In addition to base oil from Ruwais to China, cargoes of MTBE, caustic, paraxylene, benzene, orthoxylene, pyrolysis gasoline, methanol and ethanol have been noted. Westbound is not particularly busy and there is space available. Cargoes of caustic, ethanol canola oil, linear alkyl benzene, acrylate and glycols have been pushed around.
This report was originally featured in the Nov. 21 edition of Lube Report Americas.
Adrian Brown is a senior market analyst for chemicals and base oils with SSY Shipbrokers, London, can be reached at email@example.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.