Spot freight assessments have therefore become quite notional. Most owners would stick a rate of mid $20s/t on a 5,000 ton cargo from the U.S. Gulf to the east coast of Mexico, but where it becomes difficult is in the smaller sizes, where rates can vary by $5 to $10/t. One owner for instance is fixing 3,000 ton cargoes from Houston to the east coast of Mexico at $36/t, whereas another is fixing at $27/t for similar business.

Numbers into Brazil have firmed too, not really because of a surge in spot fixing but because contractual business is sufficient to fill the ships. A 5,000 ton cargo of base oils from Houston to northern Brazil would currently fetch mid $40s/t, up from the $42/t or so of last week.

Eastbound transatlantic back to Northwest Europe is sluggish, but there have been some cargoes back into the Mediterranean, making this area tighter. A 3,000 to 4,000 ton cargo of base oils from Houston to Turkey would probably cost close to $70/t.

There is no remaining June space left from the U.S. Gulf to Asia either, but for some owners it is too soon to fix for July as they have not yet received all their contractual nominations. We do see freights for small parcels lifting by some $10/t, with a 2,000 ton cargo from the U.S. Gulf to principal scheduled ports in China paying around $110/t.

India is tricky too, and 2,000 to 3,000 tons of base oils from Houston to Mumbai could also command $110/t.

Europe
Some owners remain disappointed with the level of business in some parts of Europe, but on the whole, volumes have increased. Northern Europe for example sees fewer ships open on prompt dates, and there are reports of slightly higher numbers being paid for routine cargoes.

There are more cargoes being quoted southbound into the Mediterranean too, and we are aware of some freights that have been significantly higher when compared to the rates agreed last time.

Northbound out of the Mediterranean is generally stable, whereas inter-Med business can also produce some firmer freights. We have fixed cargoes from the eastern to western Mediterranean that have paid some $5 to $6/t more than on previous occasions.

Transatlantic is very slow, both in terms of chemicals and clean petroleum products. Rates for 5,000 ton parcels from Antwerp-Rotterdam-Amsterdam to Houston have slipped to mid $30s/t, and in the case of 37,000 tons of clean petroleum products, rates are below $15/t.

Europe-to-Asia remains strong. A 5,000 ton cargo of easy chemicals from the eastern Mediterranean to China collected $110/t, for instance, and most owners are seeking levels of mid $90s/t for 5,000 ton cargoes from Antwerp-Rotterdam-Amsterdam to principal ports in China.

There are plenty of cargoes to India and the Middle East Gulf, including many base oil enquiries. Space is tight, however, and will tighten further now the phosphoric acid prices have been agreed into India for deliveries from North Africa through to September. A 5,000 ton cargo from Rotterdam to the west coast of India presently pays around $75/t.

Asia
Asia remains awash with open positions. Unfortunately for owners, commodity prices in Asia tend to be higher, which is after all why the ships are there in the first place, and this means that there are hardly any backhaul cargoes available.

Palm oils are by volume the greatest spot commodity, but the oversupply of tonnage does mean that freights have dropped to around $37/t for 15,000 tons of palm oil from two Malacca Straits ports to two Mediterranean ports. Rates for 10,000 tons to the east coast of India have edged down to $16 to $17/t, and barely $20/t for the west coast of India.

In terms of base oil this would mean that to ship a 5,000 ton cargo from Ulsan to the west coast of India should cost less than $30/t, and all the way to Rotterdam probably not much more than $42/t. There are plenty of low freight opportunities from India and the Middle East Gulf too, created by the large number of imports into the region.

Notes
In order to reduce the risk of maritime pollution, it was agreed by the worlds maritime nations, under regulation 20/21 of MARPOL Annex 1, that a total ban on single hull tankers would be introduced in 2010. So far, however, there has been very little confirmation as to what exactly will happen.

More precise information can be found on the International Maritime Organisation (IMO) website, but until now it would seem that only the European Union, Australia, China, Mexico and New Zealand have communicated their intention to IMO to deny entry to ships operating beyond 2010.

Eleven countries have advised IMO that they will be granting an extension to their oil tankers past 2010, namely Hong Kong, Singapore, Bahamas, India, Liberia, Japan, Barbados, Panama, Marshall Islands, St.Kitts and Nevis and Cayman Islands. Some are prepared to allow a blanket extension, whereas others will treat it on a case by case basis.

In the current economic climate, it is hard to estimate how many ships will be around as the phase out dates are reached in 2010 (note, it is the anniversary of the vessels delivery date, which means that vessels reaching that date in 2010 will then be required to be withdrawn from service). A lot will depend on the state of the market, scrap prices, freight rates, bunker prices, transport demand, cost of upgrading to double hull etc. What we can be sure of is that all single hull tankers of 5,000 dwt and above will be phased out on their anniversary in 2015.

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.