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March 15, 2019

Volume 6 Issue 11

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SSY Base Oil Shipping Report

Markets out of the U.S. Gulf are almost entirely focused on contractual shipments, meaning that space is very tight for spot cargoes. European and Asian markets are both plodding on – nothing spectacular, but nothing critical either.

U.S. Gulf

The lack of space is the defining reason why so little has been fixed to the Far East so far this month. Owners are talking numbers in the $70s per metric ton for 5,000-ton parcels, but at these kinds of levels traders have not been pressing hard to firm up their requirements. It is possible that an outsider could go on berth, but since everyone knows how tight the market is, rate ideas would likely be at a premium above even those of the regular carriers. There is a chance that not all contractual nominations will materialize, in which case there might be some last-minute space later in the month. Twenty-five thousand tons of tallow and technical corn oil was booked from Houston and New Orleans to Singapore in the low $70s/t. Seventeen thousand five hundred tons of methanol fixed from Jose, Venezuela, to the Far East in the $60s/t.

Following a plant outage in Europe, traders were looking at the possibility to ship benzene along the transatlantic route to Europe, but with no prompt space around which could give March arrival, the opportunity looks to have disappeared as quickly as it arose. There had even been attempts to move benzene from Montreal, Canada, to Antwerp-Rotterdam-Amsterdam or Gonfreville, France, or Tees, England, but with the same result. Several traders have been checking what ships are around for 5,000-ton lots of styrene from the U.S. Gulf to Antwerp-Rotterdam-Amsterdam for the second half of March, and some cyclohexane was seen from Port Arthur, Texas, or Corpus Christi, Texas, to Antwerp for mid-April. Nine thousand tons of tall oil was heard fixed from Mobile, Alabama, to the Baltic and some turpentine was transported to Bordeaux, France. Biodiesel and ethanol are among the outstanding enquiries to Europe. Three thousand tons of monoethylene glycol was seen from Geismar, Louisiana, to Antwerp-Rotterdam-Amsterdam, and, along with styrene, has been a regular quote on the U.S. Gulf-to-Mediterranean service. Twenty thousand tons of methanol was quoted from Jose to Antwerp-Rotterdam-Amsterdam for April.

There has not been a great deal of fixing to the Caribbean either, and some of the requirements from last week are thought to be still uncovered. Small parcels of caustic and vegetable oil have been recorded, and 1,200 tons of base oils were looking to ship from U.S. Gulf to Altamira, Mexico.

Several large lots of ethanol are understood to have fixed into Brazil on the route to the East Coast of South America, including one that is loading in New Jersey. Eight thousand tons of ethylene dichloride was quoted from Lake Charles, Louisiana, to Maceio, Brazil, for the end of March. On the base oil front, a couple of existing requirements were refreshed, which saw 4,100 tons of base oils quoted from Houston to Rio de Janeiro for the second half of March, and 8,000 tons to 9,500 tons from Houston to Santos, Brazil, and Rio de Janeiro back out for the end of March. Traders are still hunting for ships that can take bright stock from Rio de Janeiro to India or the Middle East Gulf.

Base oils continue to be seen to India, with two liftings each of 4,500 tons booked from Houston to Mumbai, while others re-entered the market with 16,000 tons of base oils from Pascagoula, Mississippi, and Port Arthur to India and Jebel Ali, United Arab Emirates. Several large shipments of ethanol are being pursued to India for April, and there has also been some interest in shipping styrene to India.

Europe

The first April positions are starting to show into the North Sea and Baltic, but the vast majority of the fleet is barely a week or 10 days in advance. What is surprising is that it comes at a time when many companies report they have been importing increased volumes of material into the United Kingdom or have been ordering additional material to be shipped out from the U.K., again through concerns of a no-deal Brexit. Bad weather has caused the suspension of pilot services in a number of ports this week, and, added to the inevitable berthing delays, this will cause some tightening of space.

After a lengthy period during which the northbound route was considered the most active of the markets into or out of the Mediterranean, a fresh injection of demand sees the southbound route resuming its position as the primary, or fronthaul route. Large lots of caustic are said to be going to Turkey and Spain, while styrene has been talked into the East Mediterranean. A couple of ships have been fixed with aviation gasoline from the Baltic, and a couple more are taking alkylates to Lavera, France, and Greece. Seven thousand two hundred tons of base oils were quoted to Vado, Italy, with a further 4,850 tons of base oils looking to go down to the East Mediterranean, these requirements probably the result of the turnaround in Augusta, Sicily. Two thousand tons of acrylonitrile was noted from Sealsands, England, to Yalova, Turkey. Inevitably, a couple of large lots of FAME were booked into the West Mediterranean. Two thousand tons of base oils were attempted from Riga, Latvia, to Marmara, Turkey, and traders have been looking to do more paraxylene into Sines, Portugal. Six thousand cubic meters of ethanol from Rotterdam to Trapani, Italy, was noted, and 2,500 tons of wax fixed from Fawley, England, to Spain.

It was been quieter this week on the northbound route. Phosphoric acid has been seen to France and Poland, while some caustic was booked to Cardiff, Wales. Eight thousand five hundred tons of aromatic oil and cutterstock from Aliaga, Turkey, which many owners are reluctant to touch, found someone willing to take the cargo to Antwerp-Rotterdam-Amsterdam.

There has been a moderate amount of enquiry on the intra-Mediterranean route that has almost cleared out the remaining prompt vessels in the West Mediterranean, but at rates that are still depressed. A couple of base oil cargoes were noted moving into North Africa, Turkey and Israel, with one parcel being shipped from Spain to meet up with an exporter in Gibraltar and head off deep-sea. Three thousand tons of benzene from Skikda, Algeria, to Tarragona, Spain, managed to get fixed. The methanol cargo from Marsa, Malta, ended up going to the Adriatic rather than to Rotterdam. Six thousand tons of pyrolysis gasoline from Venice, Italy to Barcelona paid around $150,000.

It has been a very volatile market on the transatlantic route westbound, illustrated to good effect by a string of paraxylene fixtures to the U.S. Atlantic Coast over the course of a fortnight. The first cargo of 7,000 tons went in the upper $20s/t, the subsequent 5,000 tons cost the charterers $44/t, while the final 10,000 tons is said to have gone in the $20s/t again. More cargoes of methanol and FAME have been attempted, and there are a couple of aniline cargoes to be lifted. Pyrolysis gasoline continues to be seen, and a couple of small chemicals parcels have been seen into Mexico. Eight thousand four hundred tons of base oils from the Spanish Mediterranean to Havana, Cuba, were rumored to have gone in the $70s/t, while 15,000 tons of base oils were quoted from Livorno, Italy, to Port Cardon, Spain, for the first half of March.

March space is scarce to the Far East, and rates are edging upwards slightly. Ten thousand tons of methanol has been talked out of the Baltic to China, but other destinations have been tried too. Fifteen thousand tons of base oils were pushed around Kavkaz, Russia, to Singapore, and others tried 3,000 tons from Greece to Singapore as well as 3,000 tons from Gdansk, Poland, to Nantong, China. Three thousand tons of base oils fixed from Fawley, England, to Singapore in the $90s/t, and another small lot of base oil was booked from Antwerp to Singapore and Ulsan, South Korea. Two thousand tons of butanediol is still there to Dongnai, Vietnam, as is 3,000 tons of octene from Tarragona to Map Ta Phut, Thailand. Five thousand tons of styrene concluded Tarragona to China, but no other styrene was seen. Parcels of butanol, phenol, monopropylene glycol, nonene, 2-ethylhexanol and ADN were noted.

Along the India and Middle East Gulf route, several base oil parcels have been noted to Aqaba, Jordan; Adabiya, Egypt; Yanbu, Saudi Arabia; and Jebel Ali, and 4,000 tons of acrylonitrile was quoted from Ventspils, Latvia, to India. Small parcels of isopropanol, methyl ethyl ketone, hexane and propanol are quoted.

Asia

Most vessels on the domestic route to Northeast Asia have fixed into the second half of the month, but the market feels dull. Rates are under neither downwards nor upwards pressure. There have been the usual base oils from Korea to China and Taiwan, while cargoes of benzene, toluene and paraxylene have been quoted into China, all for March loading. Southbound business is slow, with mostly smaller parcels seen, or occasionally some styrene or paraxylene.

Northbound freights remain strong, with numerous cargo enquiries keeping space tight. Five thousand tons of benzene from Sri Racha, Thailand, to Pyongtaek, South Korea, fixed at $42/t, for example, which is a $5/t increase since January. Further cargoes of styrene, vinyl acetate monomer, paraxylene, methyl tertiarybutyl ether, tertiary butyl ether, pyrolysis gasoline, heavy aromatics, base oil, fatty alcohol, benzene concentrate, toluene and biodiesel have also been seen. With the market staying strong on northbound routes, owners who keep their ships in the Southeast Asia trades have been finding less competition for cargoes. Aromatics have been busy, with paraxylene noted from Sri Racha, pyrolysis gasoline from Batangas, Philippines, and benzene from Maptaphut, Thailand.

There is not much space around on the transpacific export route for March nor even April at this stage, though a ship coming from drydock could possibly look at the end of April business from the River. The arbitrage to ship mixed xylenes to the U.S. Gulf is apparently open, but the shortage of space is an obstacle.  Numbers remain firm to Europe. Numerous biodiesel requirements are crowding around, with a couple of them outstanding for weeks already. Those that have been fixed show levels in the high $70s to mid $90s/t, depending upon size to ports.

Cargo volumes in the regional market along the India and Middle East Gulf route are healthy and space is tight, keeping freights firm. Seven thousand tons of easy chemicals from Yanbu to the U.A.E. reportedly achieved $39/t. Six thousand tons of base oils fixed from Sitra, Bahrain, to Mumbai, and there have been other base oils shipped from Al Ruwais, U.A.E.; Hamriyah, U.A.E.; and Yanbu. After the brief downwards blip last week, eastbound freights have started to rise again with better demand noted. Westbound numbers are also firm, with some cargoes, such as 6,000 tons of benzene from Mangalore, India, to Tees or Huelva, Spain, pushed heavily for prompt loading. Fifteen thousand five hundred tons of caustic fixed from Middle East Gulf to Turkey in the high $50s, with more caustic quoted to Turkey and Finland. A lot of glycol has been noted too.

This report was originally featured in the March 13 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 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.