Tanker Trends, May 2023

Freight rates for chemicals marginally declined through the last couple of months for the long haul as well as short-haul routes due to plant maintenance shutdowns and uncertainties regarding?interest rates; most forecasters believe freight rates will rebound and stabilize at some point.?

The impact of low consumer demand for goods and the slow pick up of Chinese upstream and downstream demand also adds pressure to the market.

The forecast for Chinese economic growth remains quite positive for the balance of 2023, with forecasts predicting an improvement over the 2022 rate of 3% to possibly 5% for 2023.

On the basis of an improving economic picture for China and strengthening consumer demand, petrochemical import demand for feedstocks should increase, benefiting the long-haul chemical tankers fleets with higher capacity, such as MR tankers for voyages from the Middle East and the US Gulf to China.

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As the debate on the fuel of the future continues between shipowners and regulators, it appears that Methanol is gaining favor with owners and ports. The supply side is integral as existing port infrastructures may not support the favored fuel of the future; however, it appears that some ports are moving ahead to provide options for owners. The latest port to ramp up for Methanol fueling is Singapore. Singapore is a strategic location for bunkering which will provide owners with more confidence on the supply side. According to some reports, the choice for Methanol-fueled engines is outpacing the LNG option this year for newbuilds. Tanker owner Union Maritime has opted for the Methanol-ready engines for their new build program. The supply demands for bunkering ports such as Singapore intuitively may be beneficial for Methanol-capable tankers in the future; however, this premise is not supported by analytical data at this point but will be developed for a future report.

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Newbuild activity in China continues to be steady as China continues to add capacity. Hengli Industries continue to ramp up new build orders to support their acquisition of the bankrupted STX yard. It appears the yard has been dormant for the last few years. Hengli Shipyard is reported to be the largest shipyard in China from a land perspective. Hengli is actively pursuing MR-size tankers for the yard. Presently order book is light with six bulkers as they continue to look for opportunities.

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The CPP market has flattened over the past couple of weeks, pushing the swing MR tonnage back into potential chemical trades seeking cargoes. The market has reported that the trade has been adversely impacted due to reduced refinery runs against eroding margins for refiners.

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Market information is indicative of the difficulty of forecasting for stakeholders in the volatile business of shipping, as evidenced by the flattening of a previously robust CPP market. Shipping traditionally has been a cyclical business; however, some experts claim that due to many influencing factors, geopolitical, tonnage demand cost escalation, over tonnage, under tonnage, etc., forecasting has become more complex and challenging for all.?