Markets - Chemical tanker rates set to improve

Nov 10 2017

Subdued ordering and a narrowing in the tonnage supply-demand gap from late 2018, is expected to support a recovery in the chemical shipping market, according to the latest edition of the ‘Chemical Forecaster’, published by shipping consultancy Drewry.

Drewry estimated that tonne/mile demand of chemical commodities will grow by 3.8% on a year-on-year basis in 2017, of which the organic trade is likely to grow only at 1.5%. By contrast, inorganic and vegoil tonne/miles are expected to increase by 6.3% and 6.5%, respectively.

Drewry also estimated that the global chemical trade will grow by 3.3% in 2017, owing to the strong vegetable oil trade from Southeast Asia to South Asia.

The recent reduction in US exports, as a result of Hurricane ‘Harvey’, which had a negative impact on the chemical shipping trade, is expected to prove only temporary. Trade will return to normal patterns when North American plants resume production.

Chinese demand for methanol has been improving during the second half of the year as MTO plants either plan to ramp up or resume production. Ten new MTO plants are coming on stream in the second half of 2017 and two new plants will begin operations early in 2018. One methanol plant in Iran and two plants in the US will come online by the end of 2017.

As a result, Drewry expected moderate growth in the global methanol seaborne trade, especially in long-haul and domestic trade routes in China.

Timecharter rates picked up in 3Q17, supported by strong demand for CPP and palm oil. Robust demand, high fuel production and declining fuel inventories will strengthen the clean product tankers market from 4Q18.

“The chemical tanker fleet is oversupplied, and increased demand in the CPP market will attract more swing tankers to move to the CPP trade. Overall, we expect earnings to improve over the medium term,” said Hu Qing, Drewry’s lead analyst for chemical shipping.


Previous: Pyxis switches to timecharters to halt revenue slide

Next: Markets - Older VLCCs in favour

Nov-Dec 2020

Shipping post COVID - practicality of decarbonisation - Hafnia and vessel performance