Chemical Tanker Market Improves: Odfjell

The chemical tanker market saw continued improvements into what normally is a seasonally weaker first quarter, said Odfjell Group, a company specialising in worldwide seaborne transportation and storage of chemicals and other speciality bulk liquids.

Strong exports from the US and Middle East were key drivers in this quarter which also impacted other trade lanes as well. There was less supply pressure from swing tonnage during the quarter, but we experienced some increased competition especially in the Middle East towards the end of the quarter.

The global core chemical tanker orderbook stands at 7% of the current fleet. The global deep-sea fleet based on vessels larger than 18,000 dwt grew by net 10 vessels in 1Q19 as 12 vessels were delivered, and 2 vessels were scrapped. There were zero new orders for core chemical tankers concluded during the quarter.

"We are seeing the early signs of the impact from new and large export-oriented expansions from the US and Middle East coming on stream. We expect this impact to accelerate further into the second half of 2019 and into 2020. More than 20 million tonnes of low-cost organic liquid chemical capacity is coming onstream between 2019 and 2020, of which the majority is expected to be seaborne traded," the company said.

Newbuilding deliveries to the chemical tanker fleet continue its declining trend. We forecast 8 core chemical tankers to be delivered in 2H19, of which 3 to Odfjell, compared to 18 vessels delivered in 1H19.

“The chemical tanker markets improved in the first quarter and we expect the trend to continue as a result of the strong fundamentals in our markets, and a firming tanker market in general," Kristian Mørch, CEO Odfjell SE said.

"We forecast chemical tanker supply growth of 2% and chemical tanker demand of 5% on average per year through 2021," the company added.