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Thursday, November 15, 2018

Strong chemical tanker market – high deliveries expected, but increasing recycling too

According to the 4th quarter Drewry analysis of the chemical market, the market continues to experience a period of strong rates. The winter heating months and consequent high product demand mean a high level of activity. The overall supply/demand balance narrowed during 2004, which was reflected in stronger freight rates especially towards the end of 2004. The development in chemical tanker freight rates can be found on the INTERTANKO website.

According to Drewry, the supply/demand balance in 2005 and 2006 is expected to remain tight.

As in most other shipping markets, the development in the chemical tanker market continues to be dependent on the way China’s economy and trade progress. The Chinese economy offers great potential to absorb exports from other regions. With planned chemical capacity expansion in the Arabian Gulf (AG) estimated to be around 28 million tonnes per year by 2010, there will be considerable growth in regional chemical trades between areas such as AG and China.

The chemical trades are estimated by Drewry to have increased from 129.3 million tonnes in 2003 to 134 million tonnes in 2004 or 3.6%. The trade in organics has increased by 5.1% while the trade in inorganics declined by 2.4%. The trade in vegetable oils and fats increased by 5%. The result was that demand for chemical tonnage is estimated to have increased by 4.3% in 2004.

Graphs and tables showing the development in the chemical seaborne trade can also be downloaded from the INTERTANKO website.

The chemical tanker fleet increased from 25.3 to 26.5 million dwt from 2003 to 2004, or by 4.9%. 1.3 million dwt was delivered in 2004 while 0.2 million dwt was removed. Currently 20.2% of the fleet is on order (5.35m dwt). However, growth in the fleet has not been uniform across the vessel size groups. The maximum growth was seen for the 30,000 dwt and above segment, which increased from 12.0 to 12.8 million dwt, with 59 tankers totalling 2.4 million dwt on order. As much as 37% of the overall chemical tanker orderbook is expected to be delivered in 2005 (96 tankers of 1.9 million dwt).

In the last five years there have been few deletions in view of the relatively young age profile of the chemical tanker fleet. 25 years is generally considered to be the average economic life of a chemical tanker. However 317 chemical tankers were built before 1979 and are already over 25 years old, which indicates that a rise in the number of deletions can be expected from this year onwards.

INTERTANKO recorded as sold for decommissioning last year 18 chemical tankers of 287,567 dwt with an average age of 27.4 years old, plus 9 chemical/oil tankers of 137,921 dwt with an average age of 26 years old.

Up to 23 February this year INTERTANKO has recorded 4 chemical tankers of 17,037dwt with an average age of 30 years old, plus 4 chemical/oil tankers of 20,999 dwt with an average age of 30 years old, sold for decommissioning.

Contact: Erik Ranheim or Jan Svenne