Chemical tanker markets worldwide are beginning to see some faint signs of recovery, with more cargoes quoted and the amount of open space slowly becoming less prolific. It is a general view, and does not apply to every single route. The long-haul routes, in particular those into Asia, are among the first to benefit from the increased enquiry. Some of the coastal routes remain subdued, and in those markets it is fairly easy to find ships able to cover most requirements.
Reports from Egypt suggest that the revenue from the Suez Canal may drop substantially due to the global economic crisis, and the number of ships taking the longer route around Cape Horn to avoid the pirates.
U.S. Gulf of Mexico
It is harder to find ships fully open in the U.S. Gulf any more. The local U.S. Gulf to the Caribbeans market has picked up, lifting freights by a dollar or so, and may creep up further through the remainder of the month due to the tighter tonnage supply. U.S. Gulf to East Coast South America is, however, not that busy, and several scheduled vessels hold space for February. The 5,000 t cargo U.S. Gulf to Santos would fetch around $40/t currently. Biodiesel dominates the eastbound Transatlantic market, and the small ships that have spot fixed in from other areas are quickly filling with biodiesel cargoes back to Europe. Numbers work out at around $38 to 42/t for 5,000 t to Rotterdam, depending upon loadport.
Demand for benzene/toluene/xylene from Asia is strong, and one owner has inserted an additional March vessel on berth, hoping to capitalize on the growth. Some owners are seeking levels in the $50s/t for 5,000 t U.S. Gulf to scheduled principal ports in the Far East, but we have worked tonnage in the low $40s/t for such sizes. It remains to be seen whether demand for space drives freights up into the $50s/t, or whether the additional space manages to keep them in check.
Europe
European coastal markets are no busier than last week, and in some areas such as the WestMediterranean it is still very easy to locate sufficient ships, particularly for cargoes moving up to the Continent. We have seen 4,000 to 5,000 t cargoes from the Spanish Mediterranean to Antwerp-Rotterdam-Amsterdam fix at less than 20/t, and only at marginally more expensive levels from Antwerp-Rotterdam-Amsterdam back down to the Spanish Mediterranean.
The availability of tonnage in the Black Sea is presently influenced by a busier vegetable oil market in which freights for vegetable oils from the Black Sea surpass rates for chemicals and base oils, and a number of the 5,000 to 7,000 t deadweight ships have managed to fix well into March. There are good opportunities to fix Mediterranean to the U.S. Gulf, probably still for around $55/t for 5,000 t from Italy, and perhaps $60 to $65/t from the Black Sea. Antwerp-Rotterdam-Amsterdam to the U.S. Gulf is not especially busy and rates are unchanged from last week.
The routes from Europe to Asia (but not to India) have strengthened by several dollars. We saw 1,000 t Antwerp-Rotterdam-Amsterdam to outport China attract offers down to $100/t, but the tonnage situation is tightening quickly, and we could envisage an increase of $10/t on this level over the next week or so. Rates for 5,000 t cargo Antwerp-Rotterdam-Amsterdam to West Coast India remain in the very low $60s/t. It may be possible to fix 6,000 to 7,000 t base oils West Mediterranean to Lagos at $60 to 65/t for a little while longer, but if the ship owners find better alternatives elsewhere, then such numbers come under pressure.
Asia
Inter-Asian chemical markets are fairly busy, driven mostly by China, but not exclusively. We are seeing more requirements southbound into Southeast Asia for example, and even inter-Southeast Asia, an area that has been pretty slow for a long time. There seem to be many palm oil requirements, for both China and India and all seem to want February loading. We had heard that palm oil charterers were exerting pressure on ship owners to accept freights in the high $50s/t or low $60s/t for 10,000 to 12,000 t lots Malacca Straits to the Mediterranean, but owners seem to be resisting, even those with new vessels.
Checking further, we see owners asking numbers of $80/t or higher for 10,000 t lots Straits/West Mediterranean, even from owners willing to risk sailing via the Gulf of Aden. Business in and around India and the Middle East Gulf* is brisk. There are certainly many ships showing open in the area, but demand is fairly constant. We see 10,000 t lots Iran/Turkey paying $60 to $65/t, and to Antwerp-Rotterdam-Amsterdam around $75/t.
Notes
Events in and around the Gulf of Aden are still some of the most frequently discussed topics in the shipping industry. This week, we have had confirmations from more ship owners that they will incorporate the Intertanko piracy clause in their charterparty terms. We have had warnings that the settled weather in the region would be more conducive to attacks on shipping, which has occurred. We have been advised that some of the pirates may focus their attention to shipping further north than of present, particularly between the towns of Ceelayo and Laasgoray.
Finally, we have reports from Egypt suggesting that the revenue from the Suez Canal may drop by as much as 25 percent this year due to the global economic crisis, and the number of ships taking the longer route around Cape Horn to avoid the pirates. With a typical 20,000 t deadweight chemical tanker costing $130,000 for a single transit of the Suez, it is easy to see how much revenue will be lost. Should this situation continue, there are a couple of options open to the Egyptian authorities. They could attempt to claw back some of the lost revenue from those vessels who do risk the transit in the form of higher Suez dues. Or, they could offer a reduction in the hope of attracting more business. Both options would have an impact on freights.
*Middle East Gulf is the international shipping industrys preferred name for the body of water known both as the Persian Gulf and the Arab Gulf.
Adrian Brown is senior market analyst for chemicals and base oils with SSY Shipbrokers, London. Information about SSY can be found at http://www.ssyonline.com. Adrian Brown, in the U.K., can be reached directly at research@ssy.co.uk or by phone at +44 1207-507507. In the U.S., SSYs Steve Rosenthal can be reached at fix@ssychems.com or +1 203-961-1566.