MSI senior chemical tanker market analyst Bonita Nightingale said the market segment is likely to remain tight for the next two years, says an article published on Riviera.
Chemical carriers sector
Noting that global chemical markets are “bending under the pressure of economic headwinds,” with trade falling by 4% year-on-year in 2022, Ms Nightingale said the chemical carriers sector is being impacted by changes in market fundamentals.
Speaking at the International Chemical Product Tanker Conference on 25 April 2023 in London, Ms Nightingale said the inorganic chemicals trade was the only market sector to see improvement over the course of the prior year, posting a 2.5% growth year-on-year in 2022.
Bullish earnings environment
On aggregate, the chemicals trade was dragged down by declines in the organic chemicals and edible oils segments, she said.
The supply and demand side of the chemical carriers trade has also seen a change in market conditions. Contracting has been minimal in recent months, but scrapping has also declined sharply due to the bullish earnings environment seen in the broader tanker market.
More lucrative segments
Ms Nightingale noted the exodus of ‘swing’ tonnage from chemical trades to more lucrative segments, combined with an increase in overall tonne-miles, has sharply reduced the effective supply of chemical tanker vessels.
In conclusion, Ms Nightingale explained the current market picture had less to do with chemical and edible oil supply and demand balances, and more to do with external factors, such as the increased demand in the clean petroleum products trade.
Influenced rates
“It is these factors outside the sector that have influenced rates,” said Ms Nightingale.
Market balances are likely to remain tight for the next one to two years at least, she said.
Did you subscribe to our Newsletter?
It’s Free! Click here to Subscribe.
Source: Riviera
