The amount of new material quoted on the market for routes from the U.S. Gulf to Europe has been steadily falling, and although it has not had a noticeable impact on freight rates so far, it will perhaps only be a matter of time.

Styrene is still being attempted, with one ship picking up a combination cargo of 10,000 tons of styrene and glycols from Lake Charles to Port Neches/Antwerp-Rotterdam-Amsterdam for a level believed to be in the mid-high $50s per metric ton. Further glycol shipments are a distinct possibility, as is phenol, with traders looking at stems out of either the U.S. Gulf or Philadelphia. A shipment of 10,000 tons caustic was attempted from the U.S. Gulf to Finland but is believed to have been eventually withdrawn.

There is no sign of base oils moving on these routes.

A small amount of September space to the Far East is still available, after which a couple of October ships can accommodate some parcels. Base oils are lacking in this direction too. Instead, styrene, ethylene dichloride and ethanol are the main commodities on view. Rates are not really moving either way at present.

On routes to the east coast of South America, there have been a number of requirements into Brazil in particular, notably caustic, paraxylene and a small lot of base oils, but space has been popping up, even among the scheduled carriers, and rates are looking slightly weaker.

The main item of news on routes from the U.S. Gulf to the Caribbean this week is Venezuela, or more precisely, the shortage of funds to pay for imported cargoes. There are at least half a dozen chemical tankers backed up, waiting to discharge, with several more on the way. The main commodity affected is vegetable oil, but there are some chemical cargoes too, as well as sulphuric acid.

Owners are understandably more cautious about fixing further business into Venezuela as it would seem the situation is taking a long time to resolve. A byproduct of all this is that quite a lot of tonnage is being tied down and that may impact on U.S. Gulf freight levels if it carries on for a long time.

There is not much prompt space remaining on the route from the U.S. Gulf to India-Middle East Gulf, with the next ships to have any room for larger lots of base oil being only in the second half of October. There are competing cargoes already looking for that space, such as 10,000 tons of ethylene dichloride to India, as well as some large lots of ethanol. Rates are steady for the moment, however.

Europe

The North Sea and Baltic region continues to be very quiet, and the amount of tonnage open within one weeks time has grown. Rates however show no inclination of subsiding, although some of the more popular cargoes on routes that have large amounts of tonnage shipping should be able to push through some decreases.

On the whole, the southbound route is relatively well-balanced between demand and supply of tonnage.

There are still some decent chunks of material that are being quoted into the Mediterranean, such as biodiesel, paraxylene, ETBE etc., yet the list of open tonnage does seem to be growing, which may bring pressure to bear on freight levels.

Base oils are not that active, unless as part of the majors programs to restock their Mediterranean-based affiliates.

It has been a bit slow on northbound routes this week, and there has even been space available out of the West Mediterranean. Some cargoes, such as biodiesel, caustic and isomerate, have been fairly quick to go, but some other cargoes, such as wax and even base oils from Italy, have taken a little longer.

It has not been a great week in inter-Mediterranean trade, with quite a lot of ships able to offer September space. There has been a bit of biodiesel work, fortunately for owners in the West Mediterranean, as well as a fair few caustic shipments.

Continuing problems at the Moroccan refinery have resulted in yet more base oils and clean petroleum cargoes being imported.

In the East Mediterranean, there has been a steady amount of Russian base oil moving into Turkey. Methanol too is becoming more active since the plant in Libya has restarted and exports from the Black Sea are more common.

Recently there has been a bit of a stir created on transatlantic routes when traders began fixing benzene to the United States, which is a product that has not been exported from Europe for quite a while. However, the window of opportunity does not seem to have lasted, and that grade seems to have gone quiet again.

Caustic is more active apparently, and so too has been sulphuric acid and urea ammonia nitrate. There is a feeling that base oils should be moving to Colombia from Europe, but to date there has not been much evidence of this, apart from the cargoes going to Punta Cardon.

September space from Europe to the Far East is available, along with a selection of October ships. This route is very slow on the spot side of things, although there has apparently been trader interest in shipping base oils from North France to Asia. Rates are clinging on at unchanged levels, chiefly because there has not really been anything to challenge them.

Some September space remains on routes from Europe to India-Middle East Gulf, but there are signs of a resurgence in demand from India for chemicals, acids and vegetable oils, with cargoes being quoted from the continent, Mediterranean, Black Sea and Red Sea.

Some base oils are being attempted from the Mediterranean into the United Arab Emirates, and there has been a larger cargo quoted from Italy to Yanbu recently.

Asia

Within Asia, there is still a lot of concern about China, which is having an impact on local intra-Asia shipments. The Organization for Economic Co-operation and Development lowered its forecast of growth in China yet again this week, for example. In addition to all this are the assorted religious holidays in the region and the approaching Golden Week in China, which will see trade subside even further.

None of the individual routes within Asia are performing that well at the moment, at least in chemicals. Base oils seem to be more robust, however, and there are quite a few small shipments still outstanding within the area.

Rates have weak tons, but owners are not conceding without a fight, even though bunker prices continue to be cheap – $228/t in Singapore for 380 CentiStoke today.

On the transpacific export route, traders have been checking freight levels on benzene to the U.S. and paraxylene to Mexico, but owners are finding that few of these cargoes actually firm up enough to fix cleanly. Rates are fairly weak, with owners willing to go to the U.S. west coast for mid-high $40s/t for 6,000 ton parcels and very low $60s to Houston.

Traders are checking to see if they can send base oils from Asia to Colombia, but none have been heard fixed so far.

Small parcels of base oils have been seen looking to go to Turkey too, but space to Europe is more of a problem unless it entails moving material from the main hubs of Korea and Taiwan to the main hubs in Rotterdam and Antwerp. Outside of this becomes much harder. Rates are in the region of $107/t for 5,000 ton parcels from Ulsan to Rotterdam, but then increase if unscheduled ports and/or transhipment and/or deviation is required.

Palm oil business is quiet, and rates to India for example are struggling to stay in the low $30s/t.

The Middle East Gulf-India region is facing a quieter period too as the region slides into the end of Ramadan with many offices closed. In fact, congestion at Fujairah has become a cause of concern since there is now a shortage of bunker barges, whose operators are observing the religious holidays.

Congestion at some Indian ports – notably Kandla, Mangalore and Haldia – has worsened too, with delays in the first two ports reported to be up to 4 to 5 days and 7 to 10 days in Haldia.

Adrian Brown is a 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 12 0750 7507. In the London office SSYs Ian Roberts can be reached at fix@ssychems.com or +44 20 7977 7560 and in Singapore Jordi Maymi at +65 6854 7127.