December 13, 2019
Volume 7 Issue 4
SSY Base Oil Shipping Report
Tight space availability for December has caused rates to increase on most U.S. routes, as well as in Asia. The coastal market in Europe, however, is not especially tight, and freights have not visibly changed.
There have not been any startling developments in any of the markets out of the U.S. Gulf, but merely an inexorable tightening of December space. The lengthy Thanksgiving holiday caused a temporary blip in activity too. Fog has been an issue in some of the Gulf Coast ports over the past couple of weeks. One thousand six hundred tons of two grades of base oils were quoted from the U.S. Gulf to Rio Haina, Dominican Republic, for December loading. Four thousand tons of easy chemicals were circulated from Coatzacoalcos, Mexico, to Houston basis early December, while 10,000 cubic meters of ethanol was being attempted from Texas City, Texas, to Cartagena, Columbia.
December space is tight to South America, especially since the clean petroleum market remains strong – WS190-200 has been reported from the U.S. Gulf to Brazil, equating to around $1.4 million, for example. Cargoes of caustic, glycol, ethanol, ethylene dichloride and styrene have all been pushed around for December shipment. At least two shipments of ethanol were booked into northern Brazil for around $62-63 per metric ton. There is also a possibility to send 10,000 to 12,000 tons of paraxylene into Suape, Brazil, for December.
Contractual demand across the Atlantic remains strong, and with the U.S. Gulf emptying of tonnage, ships have been encouraged to ballast in from other areas. In one instance, a large slug of ethanol back to Europe had to be covered on a vessel coming across from Europe in ballast. Glycols are still under discussion into the Mediterranean, and traders have been looking at supplying caustic into Ravenna, Italy. Five thousand to 10,000 tons of ethylene dichloride has been quoted to Barcelona, Spain, for December.
Glycols are still under discussion to Asia for December, but understandably, most other requirements were held back until after Thanksgiving. A cargo of tallow looks to have been booked from the U.S. Gulf to Singapore. Eleven thousand eight hundred tons of vegetable oil is loading for Pyongtaek, South Korea, the fixture having been concluded in the high $70s/t. Eighteen thousand tons of canola from Vancouver, Canada, to Hong Kong and Pasir Gudang, Malaysia, achieved $60/t. Thirty thousand to 40,000cbm of ethanol was quoted from Clatskanie, Oregon, for the first half of January.
Glycols are being quoted to India for December, and there is also a cargo of 5,000 to 10,000 tons of ethylene dichloride that is seeking space from the U.S. Gulf to India for December loading. Eighteen thousand tons of canola was seen from Vancouver to the west coast of India for the end of December to mid-January. Twelve thousand tons of styrene has been seeking space to India or Pakistan from Lake Charles, Louisiana, for several weeks already.
It has been a peculiar month so far to the North Sea and Baltic. There has not been what would constitute a typical year-end rush, yet there is not a great deal of idle tonnage. For the most part, the fleet has around a week’s forward employment, with a reasonable number of ships fixed into the Christmas week. The most notable feature of the week has been the frequency of shipments, when perhaps in a normal month there would be one or two routine shipments of a certain grade, but this month has instead produced four or five shipments, suggesting that various supply contracts are being honored before end-year. Occasionally, the size of the cargo has notably increased too. This applies chiefly to the chemicals market since most base oil movements, aside from a couple out of the Baltic have all been very routine.
The number of ships on berth southbound has dwindled but may partly be because so many ships have opted to trade in the North Sea region instead. Fixtures to Spain include benzene, paraxylene, acetic acid, biodiesel, ethylene dichloride and caustic, with ethanol and caustic fixed to Greece, lignosulphonate and acrylonitrile to Turkey, caustic and FAME to Italy with styrene and biodiesel to France. However, rates are generally pretty tame.
There has been a high level of demand northbound, including caustic to Finland; assorted pyrolysis gasoline and benzene shipments to Antwerp-Rotterdam-Amsterdam; various biodiesel and glycerine movements from Spain and Italy; reformate, benzene, toulene, and xylene and alkylate from Portugal; base oil, pyrolysis gasoline and alkylate from Italy; various grades of clean petroleum and vegetable oil from the Black Sea; aromatics from Priolo, Italy; Skikda, Algeria; and Lavera, France; and some acetic acid from the Black Sea that paid around $100/t.
In general, the Mediterranean is less busy than usual, and owners are having difficulty in getting their ships into position for the second half of December, despite frequent bad weather delays which would usually tighten the amount of open space available. The flow of biodiesel is a bit reduced but has been compensated by a rise in the number of small clean petroleum shipments, for which it is common to see levels of $350k for example for 10,000 to 15,000-ton cargoes from West Mediterranean to Central Mediterranean.
Freights have increased substantially across the Atlantic, mostly through a shortage of space, with the use of compliant fuels having a lesser role to play. Seven thousand five hundred tons of paraxylene from Rotterdam to the U.S. Atlantic Coast was discussed in the mid- to high-$40s/t. Ten thousand tons of biodiesel from Hamburg to the U.S. Atlantic Coast is thought to have achieved low $40s/t. Fifteen thousand tons of methyl tertiarybutyl ether from Rotterdam to the U.S. Gulf was worked in the very high $30s/t. Fifteen thousand tons of methanol looks to have fixed from Marsa, Malta, to the U.S. Gulf. Among the fixtures and enquires are shipments of caustic, wax, sulphuric acid, ammonium polyphosphate, acetone, chloroform, MDI and cumene.
Demand, although slightly improved has not been strong enough to force freights to move to Asia, even though December is relatively tight on space. Several styrene fixtures were noted, including 10,000 tons from Tarragona, Spain, and another 8,000 tons from Antwerp-Rotterdam-Amsterdam, with further enquiries from Gonfreville, France, and Moerdijk, Netherlands. Levels done so far seem to have been below $80/t. Base oils were active to Singapore, with enquiries noted from Kaliningrad, Russia, and Kavkaz, Russia, with another shipment fixed from Antwerp. The next shipment of 3,000 tons of cumene from Huelva, Spain, to Caojing, China, was covered. One thousand five hundred tons of butanol was done from Lavera to Yangtze River, China, with renewed interest seen for the next lifting. Three thousand tons of octene was quoted from Tarragona to Map Ta Phut, Thailand. Small parcels of butanediol, BGE, isopropanol and HMD were encountered, but traders attempts to ship 5,000 tons of acetone are believed to have foundered.
Some of the requirements that have been quoted over the past week to India and the Middle East Gulf have been hard to shift but may be linked to last-cargo restrictions, or berth restrictions. Small parcels of base oil have been noted, and a small shipment of hexane was attempted Constanza, Romania, to Karachi, Pakistan. One thousand tons of linear alkyl benzene was done from Algeciras, Spain, to Mundra, India, and 5,000 tons of base oils from Kavkaz to Hamriyah, United Arab Emirates, are temporizing.
The spot market in Northeast Asia is busy with phenol, acetone, methyl tertiarybutyl ether, glycols, base oils, ADN, mixed xylenes, toluene, benzene and paraxylene from Korea to China, and increasingly Taiwan appears as a destination. Space is tight for the rest of December and charterers may face higher numbers to cover any remaining cargoes. Clean petroleum space is tight too.
Part space from Korea to Singapore is rather tight until the end of the year, though freight rates seem unchanged for now. Five thousand to 5,500 tons of sulphuric acid from Ulsan, South Korea, to Haiphong, Vietnam, was quoted for Dec. 13-18, but the laycan has been stretched to encompass all of December, suggesting a limited number of offers initially.
Contractual shipments are mainly driving the market northbound, but part-cargo space is available. Mixed aromatics have been active to China, with various shipments in the 15,000 to 19,000 tons category from Thailand, Brunei and Malaysia. It is reported that some of the new benzene production in Southeast Asia is not yet fully on-spec, and is therefore being shipped to China as mixed aromatics.
The clean petroleum market sees stronger rates in Southeast Asia. On the chemical side, the market appears busy with some major chemical charterers quoting spot enquiries in addition to making heavy contractual nominations. As a result, part space is tight, and some regulars are already booking the last days of December. Rates seem to be increasing in the run-up to IMO 2020 and the use of compliant fuels.
There have not been many changes on the transpacific route. Nine thousand tons of benzene was fixed from Korea to the U.S. Gulf and enquiries have been seen for toluene, but pricing does not seem to work. There is still part space for end December and good availability for the first half of January. There are still sulphuric acid enquiries to Chile, with owners indicating high $60s/t for 20,000-ton cargoes.
There is very little part-space to Europe for the rest of the month and some ships have been delayed to due to weather. Outsiders are presenting bullish freight ideas. Biofuels are still very active from China and Southeast Asia and more chemicals possibilities have been noted into the Mediterranean and Continent.
Regular owners are enjoying a good degree of activity in the regional markets, with reduced competition and end-year rush noted. Six thousand tons of benzene reportedly fixed from Haldia, India, to the Middle East Gulf for mid-December in the mid $40s/t. Eastbound is still active and with space availability slim, the sentiment is firm. Methanol, glycols and paraxylene have all been noted for December. Westbound is considered stable with a few bits of space left to Europe. Ten thousand tons of caustic was quoted to Greece and 5,000 tons of caustic was noted to Brazil. Paraxylene and benzene continue to be quoted to the U.S.
This report was originally featured in the December 11 edition of Lube Report Americas.
Adrian Brown, a senior market analyst for chemicals and base oils with SSY Shipbrokers, London, can be reached at firstname.lastname@example.org 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.