There are one or two subtle signs appearing that suggest the long period of gloom may be close to lifting in the U.S. Gulf. There is, however, a saying that it takes more than one swallow to make a summer, and a lot will depend upon how the next week pans out. Essentially, demand for space has picked up slightly on most routes. Furthermore, the supply of fully-open tonnage has begun to thin, meaning that a number of cargoes have been quoted around for more than a week, and these are cargoes that would have been snapped up a week or two ago. It certainly has not brought about an upward shift in freight rates, but often ship owners are not in the best position to spot such changes, since most owners tend to be engrossed in specific trade lanes and care little about what happens in another route. Few owners play the entire market, or have people who study all trade lanes.

In U.S. Gulf-to-Far East trade, there is almost a desperation among owners who are attempting to fix away their last remaining tanks, and there is certainly a number of such vessels. Rates have slumped even lower, with 10,000 ton parcels from Houston to Mainport Far East fetching mid $40s per metric ton. Yet this is one of the routes that has seen more enquiry, especially of paraxylene, mixed xylenes and styrene, but also of products such as ethanol and phenol. To get a sense of the panic that is occurring among the parcel tank trades, clean petroleum owners are busy fixing 35,000 – 38,000 ton cargoes of naphtha and clean petroleum from the U.S. Gulf to Far East at virtually the same levels: low-mid $40s/t.

The transatlantic eastbound market has also recorded a slight increase in volumes. Styrene is one of the main grades, helped by better demand from Europe and better availability of material in the U.S. Gulf as producers come back after stoppages. Rates have tilted upwards, with 5,000 ton parcels fetching close to mid $40s/t from Houston to Rotterdam. Other products include some spot base oil demand, as well as wax, vinyl acetate monomer, biodiesel, urea ammonia nitrate, methanol, glycols, tall oil and methyl methacrylate.

U.S. Gulf-to-Caribbean is not exactly busy, but a number of vegetable oil cargoes appear to have great difficulty finding space. Some small lots of base oils have been mentioned for destinations such as Colombia, and various small lots of clean petroleum should help clear up the surplus tonnage.

The route from the U.S. Gulf to the east coast of South America is generally seeing static freight levels, while a cargo of around 12,000 tons of base oils has been fixed to India on an outsider vessel which could offer an additional 3,000 tons of space in that direction, in case of interest.

Europe

Another week of summer has elapsed without the market in the North Sea and Baltic coming to a standstill. Certainly there are spot/prompt open positions, but this is normal for a region so heavily entrenched in contractual obligations, and indeed it is common even in the so-called busy winter months. There is currently quite a high level of spot demand for products that are associated with automotive fuels, such as MTBE, biodiesel, ethanol and reformate, with quite a variety of other requirements from the petrochemicals side, such as aromatics, acrylonitrile, oxo-alcohols, solvents and base oils. Rates are not strong, nor especially weak.

Southbound into the Mediterranean sees steady demand and unchanged rates.

Northbound is mostly routine business, but does include some spot base oils.

Inter-Mediterranean markets have been quite active with relatively few prompt open positions. FAME and MTBE have to be the most prolific of cargoes, but most types of product/grades are represented.

Transatlantic westbound never really got into gear this week. Traders have been tinkering with a variety of possibilities, including benzene, paraxylene, mixed xylenes, toluene, caustic, sulphuric acid and urea ammonia nitrate, but despite repeated attempts, few of these cargoes wound up being fixed. Owners are mostly offering levels in the low-mid $40s/t for 5,000 ton parcels of easy chemicals from Rotterdam to Houston.

Europe-to-Far East continues to see minimal demand. Even the cargo of base oils mentioned last week to Singapore has metamorphosed into a contract shipment into the Middle East Gulf, and it looks as though something similar will happen on an ethylene dichloride possibility. Traders have been experimenting with various products such as acrylonitrile, paraxylene, cumene, ethanol, and even vegetable oil, but few have come to fruition. There is plenty of space on this route and rates are weaker. Parcels of 3,000 tons from Rotterdam to Mainport Far East have been done in the mid $80s/t, as a guide.

The route from Europe to India-Middle East Gulf is still waiting for a resolution on phosphoric acid pricing. The gap in pricing is quite narrow and once solved it should mean that some of the idle tonnage that is lingering in Europe will branch off to India. Meanwhile, base oils and vegetable oils continue to be worked from the Black Sea, while smaller parcels of phenol, acrylonitrile, aromatics and hexane fill up the space on the scheduled carriers. Rates are stable: 2,000 tons from Rotterdam to Kandla, India, was booked at $92/t, for example.

Asia

There is nothing remarkable about Asia domestic markets this week. If anything, demand has slipped a bit on the Inter-Far East routes, taking rates down by a very small amount. Some disruption is being caused in the area by Typhoon Halong.

Southbound is supposed to be slack, but as an observation, sulphuric acid traders are having a torrid time trying to attract interest in their cargoes, and there is a number of methanol, caustic and clean petroleum requirements still uncovered. Northbound contractual demand is robust for the first half of September, but there are gaps and opportunities for traders to insert parcels such as base oil. Intra-Southeast Asia demand has been a bit quiet this week.

Asia export demand sees some tightening of space into the U.S. with a number of benzene, pyrolysis gasoline, sulphuric acid and even urea ammonia nitrate cargoes listed. Rates have tilted upward slightly. Demand to Europe is provided by much the same as last week, namely the occasional benzene or cyclohexane parcel, some acrylates (but definitely fewer than before, now that the big U.S. plants are back in production), and biodiesel. Numbers are unchanged, but there is not a substantial amount of space needing to be covered.

Asia-to-India seems a bit quieter and palm oil demand is unexciting as well.

The MEG-India region is flat. Many of the same cargoes that were quoted last week are still around this week, as is a certain amount of port congestion and port delays. Space is not plentiful, but inevitably delays cause cancellations and cancelled ships are always looking for re-employment and thus keep rates competitive.

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 Panos Giannoulis can be reached at fix@ssychems.com or +44 20 7977 7538 and in Singapore Jordi Maymi at +65 6854 7127.