Drewry: Chemical tanker rates have yet to reach bottom

London based Drewry believes that the market for chemical tankers has not yet seen its last decline, still the British shipping analysts recommend investing in specialized chemical tankers.

Photo: Rederiforeningen

Drewry’s Chemical Tanker Freight Rate Index dropped during the first quarter, registering its first quarterly decline since 3Q10. Transpacific westbound rates lost as much as 13 percent. The next quarter is traditionally a lean period, with Drewry forecasting rates to bottom out before climbing in the latter stages of the year. This might not be good news for everybody.

Overcapacity remains the bane of the market, so owners are hoping for a surge in freight rates coupled with a fall in bunker prices, which have eroded their earnings. Otherwise, they will struggle to maintain service levels and avoid serious cash-flow problems and insolvencies.

BLT restructurings

There are still several companies struggling with bankruptcy or under court protection from their creditors. BLT-Chembulk is restructuring its debt by declaring a moratorium on payments until a new schedule can be worked out. However, some ships have been withdrawn from the pool as owners were not willing to agree to the restructuring.

In addition to this, it will be a quiet year in the shipyards. The order book now stands at 5.7 percent of the number of ships and 6.9 percent of the dwt tonnage, making it the smallest since 2003. Deliveries in a single quarter have not been so low since 2005.

Larger vessels

Since the end of 2011, the average capacity of the fleet grew by 0.7 percent to 20,660 dwt as larger vessels are delivered and smaller ones scrapped. The ships in chemical and vegetable oil trades were 1.1 percent larger at 14,570 dwt whereas CPP ships decreased in average size by 2.3 percent to 30,902 dwt as smaller ships were released from arrest or layup.

Rohit Pattnaik of Drewry Maritime Research stated, “While the decline in newbuilding is commendable, there is a noticeable lack of investment in the specialized chemical tanker category, which could hurt the sector in the long run.”

This hardly seems the time for owners to invest in new tonnage, but investment in the specialized tanker category might just give owners a chance to secure future demand.

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