It was a slow week for many chemical shipping routes, made worse by the extensive Labour Day holidays celebrated worldwide. Even the U.S. Gulf to Asia market that has been so active recently has wobbled, with signs of open space at the end of May into early June.
U.S. Gulf of Mexico
Shipping from the U.S. Gulf to Asia has been hit by a combination oflower commodity values in Asia for certain chemicals such as methanol, as well as a shortage of supply for thoseproducts that are in demand, which is why we see space beginning to open up a little on this route from the end of May to early June.
Freights have moderated too, even for smaller parcels, and we see levels of $100 per ton to $110/t for 3,000 tons of base oils from the Gulf to principal scheduled ports in Asia.
Space can be easily found on U.S. Gulf to Caribbean and U.S. Gulf to Brazil trades, and we stick by our assessment of $55 to $60/t for 3,000 t base oils from Houston to northern Brazil.
A couple of candidates are around for U.S. Gulf to Lagos too, and there is interest from owners who have ships already open in West Africa in ballasting up to the United States to load base oils again.
Transatlantic eastbound has slipped by another dollar or so as the aromatics/styrene business has quieted, again more through product shortages than lack of demand. Numbers to India remain firm, chiefly around $90 to $95/t for 4,000 to 5,000 t cargoes from the U.S. Gulf to the west coast of India.
Europe
Spot demand is poor on all intra-European services. Unfortunately for ship owners, contractual volumes are exceptionally low too, creating a highly competitive environment.
No route is immune, and with so much open space, freight assessments have become notional. Only a firm requirement will ensure that owners offer their lowest fixing levels, but it is rare to see a cargo fix within Europe at a rate higher than the previous fixture, such is the nervous nature of owners in this region.
Chemical demand from Europe to Asia remains firm, and freights strong. Owners are looking to achieve numbers of $120 to $140/t for 2,000 t parcels of easy chemicals or base oils from Antwerp-Rotterdam-Amsterdam to China, but May space is very tight. Delaying shipment until June will see other owners show interest and should bring those levels to around $100/t.
Acids, chemicals and vegetable oils continue to fix into India and the Middle East Gulf from Northwest Europe and the Mediterranean, keeping rates firm in the high $60s/t basis 5,000 t from Antwerp-Rotterdam-Amsterdam to the west coast of India.
Transatlantic is slow and prompt space is obtainable. From Antwerp-Rotterdam-Amsterdam to the U.S. Atlantic coast, 5,000 t cargoes fetch mid $30s/t, but small parcels traffic is firm and 2,000 t cargoes from Antwerp-Rotterdam-Amsterdam to the U.S. Gulf could easily end up costing $60/t or more.
Asia
There is undeniably a long list of open tonnage in Asia over the next three to four weeks. Rates seem close to bottoming out however, especially in the palm oil sector that sets the tone for all other liquid cargoes from the area. We have seen 15,000 t of palm oil from the Malacca Straits to the Mediterranean pay from the mid-to-high $30s/t, up a dollar or two from the rates of the previous week.
Larger cargoes can and do command low the $30s/t from the Malacca Straits to Rotterdam, but owners of smaller vessels have shied away from going that low. From a practical point of view, owners have seen they can achieve the low $20s/t for 10,000 to 12,000 t of palm oil into the west coast of India, which at least gives them some chance of loading chemicals from India or the Middle East Gulf. We even saw levels of $24 to $25/t for 10,000 t of palm oil from the Straits to the west coast of India when specific loading dates were needed.
The large number of ships swarming into the Middle East Gulf-India region is conducive to lower freight either to Asia or more likely to the Mediterranean and Europe. We would suggest 3,000 t of base oils from Iran to Turkey would cost around $60/t, and maybe even a touch below if the right ship comes along with space.
Notes
Odfjell, one of the major chemical parcel tanker owners, posted a loss of $8 million for the first three months of 2009, compared to a profit of $15 million in the same quarter a year ago. The owner comments that while cargo volumes have remained roughly stable, freight rates have dropped under increasing pressure from the number of new ships coming into the marketplace. Revenue was $311 million, down from $357 million year-on-year.
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 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.