“We expect freight rates and time charter rates for coated MR chemical tankers to continue to drop over the next few years. For anyone contemplating investment in shipping, MR chemical tankers could be one of the most unattractive sectors today,” Hu Qing, Drewry’s lead analyst for chemical shipping, stressed.
He added that the overcapacity in aggregated fleet, amounting to 52 million dwt on 1,085 chemical tankers “will squeeze freight and time charter markets.”
Further, industry observers say rates will see sustained weakness in third quarter, but pick up in this year’s last quarter.
China’s shutdown of some its plants for the G20 summit between late August to early September is seen as a major influence of supply and demand in the global market.
Drewry said growth is expected to slow down to 3.5% annually from 2015 to 2020 compared to the 2010 to 2015, when chemical tanker rates expanded at a compounded annual growth rate (CAGR) of 4.2%. Meanwhile, fleet growth is expected to slow beyond 2018 as order levels reach moderate growth.
According to the consulting firm, a total of 114 ships with over 4 million dwt were delivered in the first half of 2016. This year’s deliveries are expected to exceed those of the previous years beginning 2010. Chemical tanker fleets are also getting younger, the report said, with the average carrier aged almost 10 years.
