Chemical tanker shipping freight rates are expected to remain firm over the medium term, thanks to rising production capacity in key exporting countries, according to the latest edition of the Chemical Forecaster, published by global shipping consultancy Drewry.
Crowley tanker Pennsylvania - Image: Crowley
Since 2015, the US has started to export more and import less volume of liquid chemical products. US methanol capacity surged 77% in 2015 with the addition of around 3.5 million tonnes per year of new capacity. As a result, US methanol exports are starting to change the pattern of the long-haul chemical shipping trade. The volume of US exports to Northeast Asian and Europe rose 12% and 20% respectively last year. As a result, Drewry expects eastbound transatlantic freight rates in particular to rise over the medium term.
Since sanctions on Iran have been lifted, many new projects in the Middle East are expected to come on stream from this year. For instance, the country’s 2.3 million tonne per year Kaveh Methanol plant is scheduled to start operations in the second half of 2016. Exports from the region to Northwest Asia and Europe rose 5% and 23% respectively in 2015 and Drewry expects the pace of growth to continue over the next three years, boosting freight rates.
However, on the westbound transpacific route many large vessels have joined the trade. For instance, in the second half of 2015, 38 more vessels plied this route, of which 15 were of 30,000-40,000 dwt.
“We expect more large vessels to join the westbound transpacific trade during 2016 and as a result we expect freight rates to weaken in the short term but to remain stable over the medium term”, said Hu Qing, Drewry’s Lead Analyst for Chemical Shipping.