This is something we felt was inevitable, but in spite of this there remain far too many ships in U.S. waters for the actual amount of demand. It may be that the exodus of tonnage increases, but what we also see is that owners are unwilling to even consider certain cargoes based on the charterers current freight expectations because they would lose more money by performing the voyage than by simply keeping the vessel at anchorage.

It would require the dual thrust of greater spot volume with higher freights and with some luck a reduction in bunker costs before those vessels move again. But this is a short-term solution. Ultimately, the ships will have to move, whether in ballast to Europe or with cargo on board.

What is perhaps of greater concern is the lack of U.S. spot exports of the main commodities that normally get shipped. It would appear to be a pricing issue, and the assumption at this stage has to be that export prices are unattractive to U.S. producers who are able to sell their entire production in the domestic market.

The U.S. Gulf to Caribbean is dull, with just some clean petroleum business. Even that is mostly for September, which is of little use to the armada of prompt ships. As with many of the U.S. markets, rates are unlikely to go down further because of light sulphur fuel oil bunker costs.

Transatlantic eastbound is no busier than last week and rates are static. Where rates have fallen is on the U.S. Gulf to Far East route, but not across the board and only reluctantly by the handful of owners who still have ships on berth with space at the end of August. And not all those ships are well-suited for every requirement, so there is a level of discounting taking place. As we look into September it is unlikely that rates of high $40s per metric ton for 5,000 ton cargoes from the U.S. Gulf to scheduled principal ports in the Far East can or will be sustained.

The other route that has seen decreases is the U.S. Gulf to East Coast ofSouth America service, but freights were already at high levels and are now coming off as more space opens up. From Houston to Santos, 5,000 ton parcels are now in the region of $70 to 71/t.

Europe
A couple of owners with vessels trading in the North and Baltic seas have been finding contractual volumes to be running at lower than normal levels, and so have been more reliant on the spot market. Otherwise, the region is still satisfactory.

Southbound into the Mediterranean is busy with a whole raft of different cargoes, including base oils.

Owners are a bit more bullish northbound, especially when it comes to certain ports and specific dates. Here too, owners are attempting to recover higher bunker costs by quoting higher freight levels.

Within the Mediterranean Sea, the market is significantly tighter on space in the West than in the East, and a number of enquiries, including several base oil shipments are proving to be stubborn to cover.

Transatlantic westbound is quiet and the main grades are urea ammonia nitrate and sulphuric acid, although a couple of base oil shipments also were performed. Rates are steady at $43 to 45/t for 5,000 ton parcels from Rotterdam to Houston.

Europe to the Far East is undergoing a quieter week than last, with paraxylene, orthoxylene and phenol among the principle commodities. Rates have not really changed over the week.

Europe to India and the Middle East Gulf still sees acrylonitrile, vegetable oils and phosphoric acid, with a couple of traders attempting to ship base oil from the Black Sea, but requiring very competitive levels to be able to combat rising FOB prices.

Asia
The amount of business in the Domestic Asian trade actually grew a little over the past week, with evident scarcity of space for August lifting, especially on the intra-Far East routes.

Aromatics play the lead role in almost all of the main trade lanes within Asia, but there have also been notable enquiries for other cargoes, including base oils, butanols, ethanol, white spirit and caustic. Rates are deemed to be unchanged for this week.

Asian Export business is running well and there is little prompt open tonnage in the region. Benzene/toluene/xylene requirements have been noted from Korea to the U.S. Gulf, and there have been a number of sulphuric acid fixtures to South America.

Base oil is among some of the more unusual enquiries seen from Asia to Europe, which also includes cargoes of styrene and even acrylonitrile. Rates are essentially firm and owners continue to talk of levels in the $90s/t for 5,000 ton parcels from Korea to Antwerp-Rotterdam-Amsterdam.

Palm oil demand is fairly robust and rates remain stable to firm, whether to India, China, the Mediterranean or Africa.

The Middle East Gulf and India region is surprisingly busy, given that it is the end of Ramadan and the Eid Mubarak. Prompt space has become fairly scarce Eastbound. Charterers were looking to replace a ship that was running 10 days late for 10,000 ton easy chemicals into South East Asia but were unable to find an earlier candidate in the end.

Rates are not really going anywhere, however, and it is the same story Westbound. Bits and pieces of space exist into the Eastern Mediterranean as completion space for cargoes already booked and may provide for a discount. Traders are looking at base oil from India into Turkey among some of the other cargoes quoted on this route.

Adrian Brown is senior market analyst for chemicals and base oils with SSY Shipbrokers, London. Information about SSY can be found at www.ssyonline.com. Adrian Brown, in the U.K., can be reached at fix@ssychems.com or by phone at +44 1207-507507. In the London office SSYs Jordi Maymi can be reached at fix@ssychems.com or +44 20 7977 7560.