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August 7, 2018

Volume 3 Issue 7

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SSY Base Oil Shipping Report

It may be summer, but a tiny improvement in demand was registered in the markets in the United States and Asia, and even the European domestic market last week.

U.S. Gulf

The market looks to have bottomed out to Asia, with a wider choice of cargoes being seen. Rates have rebounded slightly too, with mid $50s per metric ton being booked for 5,000-ton parcels to China. Ethanol continues to be quoted, with 20,000cbm seen into Southeast Asia. Methanol is another possibility, and traders are considering styrene too. Several paraxylene possibilities have been noted, including 10,000 tons from Houston for a producer, and a further 10,000 tons from Texas City, as well as a possible 10,000 tons from Corpus Christi, Texas, though this last cargo is subject to tender award. A cargo of base oils has reportedly been studied to China from the U.S. Gulf, and 7,000 tons of used cooking oil from Houston to Singapore is a possibility later in August. Between 9,000 and 14,000 tons of mixed grades, including glycols, ethylbenzene and styrene are being quoted and traders are looking at small parcels of isobutanol. Fifteen thousand tons of vegetable oil also needs to be shipped from New Orleans to Korea.

Demand is steady on the eastbound transatlantic route. Traders are examining the possibility to ship styrene to Antwerp-Rotterdam-Amsterdam, and 3,000 to 5,000 tons of ethylbenzene was quoted from Carville, Louisiana, to Gonfreville, France, or Antwerp-Rotterdam-Amsterdam. A cargo of methanol looks to have fixed from the Caribbean to the United Kingdom Continent. Several shipments of base oil were done from the U.S. Gulf to Le Havre, France. Between 2,000 and 3,000 tons of lysine was quoted from New Orleans to Amsterdam, and 6,300 tons of fish oil was booked from Mississippi to Denmark. Four thousand tons of vinyl acetate monomer was quoted from Houston to Genoa, Italy, for the end of August, and 14,000 tons of ethylene dichloride was quoted from the U.S. Gulf to Tarragona, Spain, for the same timing. Traders are looking at sending 10,000 tons of paraxylene to Sines, Portugal, from Corpus Christi, subject to a tender award.

Demand into the Caribbean remains thin, while at the same time there are plenty of available positions, which are keeping freight rates under downwards pressure. Bits and pieces of ethanol, caustic, methanol and urea ammonia nitrate have surfaced, but there is very little mention of base oils.

It is unclear how many, if any, of the base oil cargoes that have been quoted to Brazil recently have actually materialized, but there is one new requirement for 3,770 tons from Houston to Rio de Janeiro for Aug. 20-31 to add to the list. The 2,500 tons parcel to Buenos Aires still seems to be potentially alive too. Beyond that, there has been some ethylene dichloride, paraxylene and ethanol quoted along the route to the east coast of South America, but there is ample space around, and rates will probably remain unchanged.

Traders continue to look at sourcing base oils for India in the U.S. Gulf, with several requirements outstanding. Twenty thousand tons of methanol was understood to have been fixed from Beaumont, Texas, to the west coast of India in the high $40s/t for prompt loading. The 60,000 tons of ethanol from the U.S. Gulf to the west coast of India that we reported last week was evidently done at $1.5 million.

Europe

A late spurt of fixing at the end of July saw most vessels along the North Sea and Baltic route cross over into August with a reasonable buffer of forwards employment. Of course there are still prompt ships around, but equally there are cargoes too that stubbornly remain uncovered. A lack of prompt space in the Baltic has caused some issues for transhipment cargoes with potential costly delays for the motherships down in Antwerp-Rotterdam-Amsterdam. Further problems too have arisen due to a shortage of barges caused by low water levels in the rivers and canals throughout much of northern Europe. All things considered, base oils remain pretty active in the region.

Some date-sensitive cargoes have been having difficulty in getting fixed into the Mediterranean, but interestingly a pretty basic requirement for 2,000 tons of easy chemicals from Rotterdam to Marmara, Turkey, for prompt loading was unable to attract much interest either. Rates along the southbound route can be quite fierce too, with 4,800 tons of base oils from Hamburg and Rotterdam to Gemlik, Turkey, and Alexandria being booked for very high $70s/t. Generally though, with some flexibility, most requirements can be covered without too much fuss.

Northbound business has not been hugely exciting, yet rates have been robust. Six thousand tons of benzene concluded from Constanza, Romania, and Aliaga, Turkey, to Terneuzen, Netherlands, while the level for 3,500 tons of pyrolysis gasoline from Rijeka, Croatia, to Antwerp-Rotterdam-Amsterdam is claimed to have been $260,000. Five thousand tons of base oils from Augusta, Sicily, to Rotterdam are reputed to have gone for $240,000. Cargoes of wax, alkylate and FAME have also been spotted, and 4,500 tons of caustic went from Lavera, France, to Cardiff, Whales. A cargo of base oils was also booked from the Black Sea to Rotterdam.

Base oils have enjoyed quite a busy spell within the Mediterranean, thanks to good demand from Turkey, Israel, Egypt, Algeria and Morocco, with business conducted to all these countries. Biodiesel has been much slower than normal, particularly in the West Mediterranean, but owners are finding alternatives, such as caustic, benzene, methyl tertiarybutyl ether and, of course, base oils. In the Black Sea, last season’s vegetable oil exports are coming to an end, and so there will be a quiet spell until the new crop is ready. This ought to pressurise freights, though 6,000 tons of methanol from the Black Sea to the Adriatic fixed in the low $30s/t, which is not particularly cheap, and there have been several cargoes from Aliaga, which seem to be lingering without being fixed.

Very little has happened along the transatlantic route this week, and the same ships that had completion space last week have the same space to fill this week. It is likely to lead to heavy competition among owners for whatever cargoes do surface.

There is not a great deal of prompt space into the Far East. Between 5,000 to 6,000 tons of benzene, toulene, and xylene is looking to ship Leixoes, Portugal, and Algeciras, Spain, to Taiwan. Two thousand five hundred tons of acrylonitrile was quoted from Antwerp-Rotterdam-Amsterdam to Ulsan, with a further 3,000 tons quoted from Aliaga to Ulsan. Styrene seems a possibility, while parcels of acetone, methyl isobutyl ketone and oxo-alcohols have been seen from Antwerp-Rotterdam-Amsterdam. Four thousand tons of base oils were quoted from Rotterdam to Singapore.

There are still too many ships on berth into India and the Middle East Gulf for the amount of cargo quoted. Another shipment of mixed xylenes seems to have been fixed from Rotterdam and Sarroch, Italy, to the west coast of India. Two thousand five hundred tons of acrylonitrile from Aliaga, Turkey, to the west coast of India looks to have gone in the mid $80s/t. More acrylonitrile has been booked out of Ventspils, Latvia, and some aniline was covered by Tees. A large lot of base oils is understood to be on its way from Kavkaz, Russia.

Asia

With the exception of the intra-Southeast Asia route, all the other main domestic routes within Asia recorded slight increases in demand. In some instances, prompt tonnage has been difficult to find, especially in Northeast Asia where there are still some delays and cancellations caused by recent typhoons. Aromatics demand in particular has increased, with many enquiries of paraxylene into China from Korea and from Southeast Asia. Base oils have been consistently busy on all the main routes, although freight levels are largely unchanged.

Traders continue to attempt to push benzene, acetone and base oils on the transpacific export route, and there have been several fixtures of sulphuric acid and caustic into South and Latin America. A couple of ships have gone on berth for August loading, and that will effectively cap freight rates. Space remains tight to Europe until mid-August. A lot of parcels have been booked into Turkey for the end of July and early August, typically acids, solvents, acrylates, vinyl acetate monomer and acetone. Base oils are understood to have been fixed to Havre, France, from Korea and there are further attempts to ship base oils to Egypt and even to Italy.

Cargo volumes are steady on the regional markets along the India and Middle East Gulf route. Many enquiries fail to get fixed however, usually because there are no ships around on the right dates, or else owners and charterers are unable to agree on freight levels. Base oils have been fixed from Yanbu, Saudi Arabia, to India, and there are several enquiries from Al Ruwais, U.A.E., to India, as well as from Sitra, Bahrain. Eastbound is generally considered to be strong by owners. Ten thousand tons of MTBE from the Middle East Gulf to Southeast Asia was booked at $40/t instead of the $33-34/t that the traders were hoping for. Westbound space remains scarce. Base oils are being attempted back into the Mediterranean, and there have been a raft of other commodities, such as benzene, paraxylene, caustic, methanol, glycols and ethanol.

This report was originally featured in the Aug. 1 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.