Chemical Tanker Market Remains Robust After Positive 2023

The chemical tanker has edged higher during 2023, as demand for sustainable and high performance building materials grew further. In its latest weekly report, shipbroker Intermodal said that “in 2023, the global seaborne chemical trade reached a volume of 372.5 million tons, not only representing a recovery with a growth rate of 1.08% from the previous year but also marking a modest increase of 0.47% above the 5-year average and a significant 8.8% improvement compared to the 10-year average. These figures indicate a positive trend in the industry”.

“More specifically, the resilience in 2023, particularly within the asphalt & bitumen trade, can be attributed to several factors. The market is driven by a growing demand for sustainable and high-performance building materials, with polymer-modified bitumen contributing to more durable road surfaces. This trend is in line with the increasing environmental consciousness and the pursuit of eco-friendly solutions. Technological advancements in bitumen production, such as bio-based bitumen, present opportunities for more economical and environmentally benign alternatives. Furthermore, the rapid economic expansion in regions like Africa and the Asia-Pacific, with their burgeoning infrastructural needs, offers a considerable market opportunity for growth in the bitumen industry. In the biodiesel sector, a similar trajectory is anticipated given the global shift towards renewable energy sources and sustainable practices that align with the trends observed in the asphalt & bitumen trade. This synergy between the sectors suggests a shared momentum that can be expected to influence the overall growth of the world seaborne chemical trade in the coming years”, said Ms. Chara Georgousi, Research Analyst with Intermodal.

According to Intermodal’s analysis, “the T/C market for chemical tankers has experienced considerable fluctuations, with a notable peak in late 2022. During this period, charterers were willing to pay premium rates for chemical tankers, amidst a combination of tight vessel supply and robust demand in the chemical trade. More specifically, a notable surge in earnings began in mid-2022, with a steep increase that peaked in December 2022. However, by mid-2023, the rates began to soften, with the decline being attributed to several factors. One significant issue is the fluctuating global market conditions, including inflation and supply chain concerns that continued to affect the industry throughout 2023. These economic conditions have led to shifting consumer preferences and industrial policies, especially those related to environmental concerns, which in turn have caused huge variations in raw material costs. The geopolitical tensions prevailing at the time also posed challenges, contributing to economic uncertainties that impacted the chemical tanker market”.

Georgousi added that “notably, the market for chemical tankers remains robust, a situation largely related to the attractive economics of trading in CPP. Versatile vessels, or ‘swing tonnage,’ are increasingly opting for CPP trade, driven by higher freight rates and reshaped by macroeconomic pressures like inflation and international conflicts. This shift, coupled with the product carrier market’s challenges — notably a low order book and a high ratio of aging vessels needing replacement — creates a gap for swing tonnage in the CPP market. Regulatory uncertainties and geopolitical shifts, including sanctions, further align to support this trend. Consequently, the chemical tanker sector is seeing tightened vessel supply and elevated freight rates”.

“The industry’s outlook remains optimistic, propelled by a strong CPP sector, suggesting that this upward trend in earnings and asset values is likely to persist in the coming years. Building on this momentum, our projections indicate a vigorous resurgence and significant expansion throughout 2024 and 2025. Indeed, the outlook for 2024 suggests a forecast growth of approximately 3%. This anticipated growth aligns with the expansion of global economic activity and the demand for chemicals in various industries, alongside the expansion of trade routes and the development of new markets, particularly in the Asia-Pacific region, which is witnessing substantial infrastructural growth and an increased focus on sustainability”, Intermodal’s analyst concluded.

Nikos Roussanoglou, Hellenic Shipping News Worldwide