Oversupply to Turn Up the Heat on Chemical Shipping in 2018

Chemical shipping freight rates will weaken through 2018 due to the depressed outlook on overtonnaged long-haul routes, according to UK-based shipping consultancy Drewry.

Some 200 IMO tankers aggregating 3.1 mdwt are scheduled to be delivered in 2018.

The influx of new tonnage will be offset to a small degree by scrapping of older tonnage especially in anticipation of the entrance into force of environmental regulations such as the new Ballast Water Treatment Convention and the sulfur cap.

However, it will not be sufficient to maintain the balance between demand and supply as Drewry forecasts that the fleet is likely to grow by an annual rate of around 3 pct this year and next year.

The global chemical trade grew by a little over 4 pct in 2017, while overall tonne-mile demand expanded by almost 5 pct.

Despite continuing global economic growth, Drewry expects seaborne chemical trade to grow by 2.5 pct in 2018 and tonne-mile demand by 1.6 pct, reflecting a slowdown in long-haul trip growth.

Increasing self-sufficiency in base chemicals in Asian countries is a definite threat to long-haul trades, Drewry said.

The global chemical capable fleet increased by 3.9 pct in tonnage terms in 2017. However, the fleet trading in the chemicals/vegetable oils market expanded by 18 pct, while the fleet trading in CPP declined by 4 pct as the weakness in this market encouraged owners to switch trades.

“We expect freight rates to remain stable in 2018 on major regional routes, but they will be depressed on traditional long-haul routes because of oversupply of large vessels,” commented Hu Qing, Drewry’s lead analyst for chemical shipping.

“The fleet trading in chemicals has expanded more than demand and will continue to so in 2018. Apart from the fact that deliveries of new ships will outpace scrapping, it is also the case that the average size of the new vessels scheduled for delivery are larger than the vessels they are replacing. We therefore expect time charter rates to come under increasing pressure,” added Qing.

Share this article

Follow World Maritime News

In Depth>


<< May 2019 >>
29 30 1 2 3 4 5
6 7 8 9 10 11 12
13 14 15 16 17 18 19
20 21 22 23 24 25 26
27 28 29 30 31 1 2

Global Sustainable Shipping Forum 2019

The event will provide valuable insights from conference sessions, great networking opportunities and will offer…

read more >

FPSO Brazil Congress 2019

Charging ahead with 24 planned orders by 2022, Brazil has once again solidified its status as one of the world’s foremost oil and gas leaders…

read more >

Nor-Shipping 2019

Nor-Shipping’s conference and event programme is tailored to deliver the knowledge, value and networking to help you build your business.

read more >

Electric & Hybrid Marine World Expo Conference 2019

Electric & Hybrid Marine World Expo Conference is the world’s only international conference…

read more >