December 21, 2018
Volume 7 Issue 3
SSY Base Oil Shipping Report
The markets are gliding towards the end of the year without any great urgency. In the case of the United States and Asia, prompt space is minimal anyway, but Europe requires many more cargoes before all the ships are safely through the holiday period.
Methanol has topped the list in terms of cargo enquiries along the Far East route this week, with some sizeable cargoes fixed. Rates have been in the $49-62 per metric ton region, depending upon volume and loadport. Ethanol has also been moving, with high $60s/t agreed on a cargo of 6,000 tons to Southeast Asia. Traders are looking at 5,000 ton-lots of styrene, with rates being offered in the high $60s/t. January cargoes are beginning to appear, but owners are unable to provide much clarity about rates so far, as they are still waiting to see how much space is left once contractual commitments have been allocated.
Cargoes are still being quoted for December loading along the transatlantic route, but there is not a great deal of space remaining, and some owners are asking for rates in the $60s/t for 5,000-ton parcels. Demand consists of methanol, ethanol, vinyl acetate monomer, styrene, metaxylene, cumene, pyrolysis gasoline, acrylonitrile, biodiesel, glycerine, glycol, caustic and vegetable oil. The regular parcel of base oil was booked from the U.S. Gulf to Naples, but the requirement for 15,000 tons of base oils from the U.S. Gulf to Lagos, Nigeria, for prompt loading remains uncovered.
The Caribbean route has been busier overall, and this week has seen traders looking to cover a couple of base oil tenders, one of which is for 2,000 tons for delivery into Rio Haina, Dominican Republic, for early January, and another for 1,700 tons for delivery into Cartagena, Colombia, for mid-January arrival. Small parcels of caustic have been noted from the U.S. Gulf to the Caribbean this week, as well as several ethanol requirements. Styrene was quoted into Mexico, and 20,000 tons of methanol was fixed from Jose, Venezuela, to the U.S. Gulf. A small parcel of methanol was quoted into Barranquilla, Colombia, as well.
Various shipments of ethanol were fixed from the U.S. Gulf to Brazil, with more requirements quoted for January. Rates into the east coast of South America are firm currently. Eighteen thousand tons of clean petroleum was fixed from the U.S. Gulf to North Brazil for a reported $1.15 million, and a requirement for 18,000 tons to 19,000 tons of urea ammonia nitrate from Mississippi to Argentina is said to be attracting freight levels of up to $1.3 million for end of December shipment.
The recent drop in base oil prices in the U.S. is said to have inspired a number of freight enquiries to India. Additionally, there is a base oil sales tender from Paulsboro, New Jersey, which has spawned a number of freight enquiries for cargoes from 6,000 tons to 12,000 tons in size to India. Ethanol is the other main commodity in contention on this route, with the Indian government encouraging greater uptake of ethanol in transportation fuels.
There has not been a notable uptick in demand for space into the North Sea and Baltic prior to the year-end. Instead, there has been a gentle, but inexorable, flow of cargo, most of which has been for loading in the period up to Christmas, and only more recently with a smattering of cargoes between Christmas and the New Year. Consequently, rates have not moved, with almost every owner facing the same situation with ships on identical dates. Aside from FAME, which remains the most active commodity, there have been some useful cargoes of pyrolysis gasoline, base oil and urea ammonia nitrate out of the Baltic. Rates for the base oils are reported to be in the €30s/t. The trend of supplying the United Kingdom with methanol from Antwerp-Rotterdam-Amsterdam continues, with 4,000 tons fixed to Barry, Wales, and the next 8,000 tons looking for space to Barry, and a further 8,000 tons to Saltend, England.
Southbound has been mostly stable, and two shipments of styrene to Barcelona in quick succession is about as close as it has come to an end-year rush. FAME continues to move, though mostly in 8,000-ton to 12,000-ton quantities. A stronger clean petroleum market might reduce the uptake of these cargoes by owners, but so far there have been enough vessels to ensure freights stay competitive.
The northbound route has not been especially active out of the Mediterranean. A couple of ships ran late and dropped out of the loading window, thereby providing opportunities for other owners instead to take those cargoes from the West Mediterranean. Four thousand five hundred tons of easy chemicals from South Spain to North Spain yielded around €130,000. Pyrolysis gasoline was quoted from both Aliaga, Turkey, and Berre, France, and a 5,000 tons benzene, toulene and xylene possibility was noted from the west coast of Italy.
Biodiesel continues to dominate inter-Mediterranean spot requirements, but for once there was talk of methanol. Marsa el Brega, a port in Libya, is expected back on-stream shortly, and 5,000 tons to 7,000 tons of methanol was quoted to Turkey from Arzew, Algeria. Several base oil movements were detected, with cargoes going to Morocco, Tunisia and Israel. A couple of benzene cargoes were booked from the Black Sea, with levels around $40/t for Adriatic destinations.
Questions have been asked about pyrolysis gasoline from Europe to the U.S. Gulf, but only 3,000 tons has been heard fixed along the transatlantic route so far, with that cargo coming out of Leixoes, Portugal. Toluene is also being investigated from Portugal and Antwerp-Rotterdam-Amsterdam, while a further 8,500 tons of paraxylene was booked from Antwerp-Rotterdam-Amsterdam to the U.S. Atlantic Coast. Twenty thousand tons of sulphuric acid was reportedly fixed from Black Sea to the east coast of Mexico for a level around $40/t. More sulphuric acid is under discussion, both to U.S. and South American destinations, and several more FAME cargoes are available for December loading. Five thousand five hundred tons of acetone fixed from Huelva, Spain, to Houston, while 2,000-ton to 4,000-ton parcels of base oil, MDI, 2-ethyl hexanoic acid and aniline have been noted from Antwerp-Rotterdam-Amsterdam to the U.S. Gulf. Four thousand tons of caustic potash was quoted from Antwerp to Jacksonville.
There is not a great deal of December space to the Far East left, but for January there are a couple of outsiders that have come on berth. Of special note is the requirement for 10,000 tons of paraxylene from Rotterdam to Zhuhai, China, as this would be the first such requirement in a long time. Traders are also looking at small lots of orthoxylene to Taiwan, and some butanediol and monopropylene glycol. Between 3,000 tons and 5,000 tons of acetone/phenol from Antwerp-Rotterdam-Amsterdam to Yangtze River, China, is back out, while 18,000 tons of base oils from Fawley, U.K., and Le Havre, France, to Singapore attracted interest from a large number of owners, with levels in the $50s/t mentioned.
There has not been a great deal quoted along the India and Middle East Gulf route this week. Two thousand tons of base oils are still trying to ship from Rotterdam to Hamriyah, U.A.E., and there have been small parcels of solvents and speciality chemicals, but the main activity has focused on vegetable oils from the Black Sea.
There are parts of the region that are exceptionally busy, such as the intra-Far East area, where space is scarce, and a mixture of strong domestic spot demand has combined with a busy year-end contractual market. Moreover, port delays are starting to build up because of bad weather, and ships have been known to lose an entire week simply because of berth congestion. Base oils are one part of the cargo equation, but aromatics are by far the largest. Northbound from Southeast Asia is the next busiest trade lane, and, for once, southbound is not far behind, which leaves just the intra-Southeast Asia area as facing slow conditions and weak rates.
As with last week, there is no obvious sign of activity on the transpacific export route, with benzene deemed unworkable, yet there is not much open space. A lot of vessels have opted for sulphuric acid, the rates for which are strong, and biodiesel and palm oil to Europe are generating a lot of employment and rising freights on the back of an energetic clean petroleum market. The market to Europe remains firm. Between 5,000 tons and 6,000 tons of cyclohexane from Map Ta Phut, Thailand, to Antwerp-Rotterdam-Amsterdam finally fixed after many weeks of trying, not in the low $60s/t as had been envisaged, but in the region of high $70s, low $80s/t. Six thousand tons of palm oil mill effluent fixed from Southeast Asia to the Adriatic for around $125/t.
The regional market along the India and Middle East Gulf route is fairly busy, yet there are several ships that can make December loading dates. Base oils are again quoted from the Red Sea to India and the Middle East Gulf for December. Eastbound space is scarce among the smaller vessels, and some cargoes have been in the market already for weeks without getting covered. Fifteen thousand tons of methanol is circulated from Mesaieed, Qatar, to Kerteh, Malaysia, for the end of December. Westbound is not as strong in comparison, and bits and pieces of space remain on some of the smaller ships on berth. Eighteen thousand tons of sulphuric acid fixed from Dahej, India, to Chile.
This report was originally featured in the Dec. 19 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.