As predicted last week, the Far East destination is one of the routes on which rates have started to increase. September space has virtually all gone, yet new demand continues to appear. Rates have gone from the real lows of $39 per metric ton for 5,000-ton parcels over the course of the week, and now owners are looking for rates in the $50-$55/t range. October is still a little uncertain, but the residue of September cargoes, combined with new opportunities in October will start to soak up the available space. Styrene, phenol, ethylene dichloride, acrylonitrile, paraxylene, glycol and ethanol are the primary grades right now. Again, no base oils are apparent.

In transatlantic trade, the eastbound route had another quiet week. Rates could come off a touch, except that there is not a lot of scheduled space on the regular carriers, and outsiders would usually seek a premium above current spot rates in order to commit a ship on berth. So far, rates are hanging on in the low $50s/t for 5,000-ton parcels from Houston to Rotterdam. Several cargoes of base oil have made their way over to Europe recently, but it is unclear if more will follow.

On U.S. Gulf-to-Caribbean routes, cargo volumes are reasonable this month on all the usual routes to Mexico, Central Americas east coast, Colombia and South Americas west coast, although there is some open space on each route. Vegetable oils are starting to become busier in the region as traders evaluate prices out of the United States, compared to oil that is extracted in Argentina, and are finding that U.S. material looks increasingly competitive.

On routes from the U.S. Gulf to the east coast of South America, it has been a rather ordinary week in terms of business into Brazil and Argentina. Ethanol gets a lot of air time, but very little of it seems to get fixed. Caustic, phenol, glycols, diesel and some small volumes of base oil comprise the majority of requirements. Rates are stable.

On trade into the India and Middle East Gulf region, October space continues to be seen, and owners with scheduled space are becoming a little concerned that there might not be enough cargo out there to fill it all. Rates being seen for 10,000-ton parcels from the U.S. Gulf to the west coast of India have dropped to the low $60s/t for example.

Europe

North Sea and Baltic activity levels are barely crawling along in the region right now. Competition among owners for cargoes is high, and there is perhaps more than the usual amount of prompt open space. Base oils continue to see some activity around the United Kingdom and Continent, but there have been fewer cargoes from the Baltic, mainly because the volumes are being sent to Nigeria and India instead.

In southbound trade, there is still a lot of space available within September, which means that rates are pretty competitive. Base oil is seen occasionally, but it is not a route that gets a lot of trading attention. A number of biodiesel possibilities are around, and rates for 5,000-ton parcels into South Spain are around 25/t.

On northbound routes, there has not been a great deal quoted to Northwest Europe out of the Mediterranean this week, and ships are having to perform all sorts of contortions in order to fill. One 5,000 ton ship that had fixed 2,000 tons of acetic acid from Kavkaz/Tarragona to Rotterdam could not find anything else to complete it with from the Black Sea and so dropped down to Israel to pick up 1,500 tons of bromide to Liverpool, yet still could not fill out the remaining 1,500 tons of space.

It has been a strange kind of week in the Mediterranean. In spite of lengthy religious holidays throughout the region, owners tend to agree that business in the Mediterranean is on the increase. Certainly the list of idle ships has thinned a little. The vegetable oil market has been partly responsible as the new crop has been processed and is taking some of the surplus tonnage. have also seen some action, but not as much as in the previous week. Biodiesel has been pretty active, but generally rates throughout the Mediterranean region remain soft.

It has not been quite as busy on transatlantic westbound trade this week. Some of the requirements have stalled, and others are awaiting fresh instructions. Benzene should still work, according to some of the pricing agencies who compute trader margins of $28/t based on freight in the vicinity of $30/t. The arbitrage for toluene is supposedly open too, while some traders have started asking about mixed xylenes possibilities. There is fatty acid methyl ester, cumene and sulphuric acid still to be done. Caustic has also been seen into Mexico, reflecting the tight supply situation for caustic in the U.S. Gulf these days. However, there is a lot of space on the route all within September, which might undermine owners attempts to keep freights moving upwards.

On routes to the Fast East, space has tightened for September loading, and several cargoes of styrene have been fixed. For example, 3,000 tons went from Antwerp-Rotterdam-Amsterdam to China in the mid $80s/t, and another 5,000 tons was done at $73/t. There is talk too of a further 5,000 tons being fixed at $75/t. Mixed xylene is also on the enquiry list, with rates in the $70s/t being achieved for 5,000-ton parcels. Base oils are included in the list, with three requirements noted to China, two of which are for traders.

For trade to India and the Middle East Gulf, as it happens, there have been quite a lot of cargoes looking to ship to India, Pakistan and the Middle East Gulf from Europe. However, rates are sagging, and this is because there are a lot of ships around. For example, 10,000 tons of ethylene dichloride was fixed from Stade, Germany, to the west coast of India at $67/t, with the usual level being low $70s/t. There is a further shipment of ethylene dichloride to be performed in October, and charterers ideas are now $65/t. Some base oil shipments are being attempted from the Mediterranean, Northwest Europe and the Baltic, but most are small lots of 2,000-3,000 tons in size, and so will probably cost in the $80s or $90s/t, depending upon sourcing.

Asia

In domestic Asia, space has tightened further in the Northeast Asia market. There is the triple whammy effect of the relaxation of enforced import controls by the Chinese government after the conclusion of the G20 Summit causing users to replenish stocks; the stimulus to buy prior to the national holiday in China in the first week of October; and the impact on the market from two powerful typhoons that hit the area, causing numerous ports and refineries to close and leading to lengthy delays and vessel cancellations.

Rates seem to be edging upwards in this trading area. Southbound trade is, however, pretty desolate. Northbound is not too bad, but the excess of tonnage in the region is causing rates to be depressed. It is the same scenario for the market within Southeast Asia.

For export trade out of Asia, space has become tighter for the first half of October on the transpacific service. Benzene is pretty active, while cumene, paraxylene and mixed xylene possibilities are also pending. Rates are moving into the low $40s/t for 5,000-ton parcels and might increase further. The market to Europe is reported to be improving, according to some regular owners, mostly with small, high-paying parcels, but there was also a shipment of 14,000 tons of phosphoric acid from China to Liverpool-Antwerp. A shipment of 7,000 tons of base oils from Malacca to Antwerp-Rotterdam-Amsterdam was reportedly fixed in the high $50s/t. Another cargo of base oils was spotted looking for space from Singapore to Rotterdam.

Hardly any business took place out of the India and Middle East Gulf region because of the week-long religious holidays that took place. When business does resume, it is expected that there will be a lot of hungry owners scavenging for cargoes where rate considerations will be secondary to getting the ships moving again.

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, Panos Giannoulis of SSY’s Chemical Tanker Department can be reached directly at panos@ssychems.com or +1 (713) 652-270 and Jordi Maymi in Singapore can be reached at +65 6854 7127.