London-based shipping consultant Drewry estimates that the global chemical trade will increase 3.3 percent in 2017 due to strong growth in vegetable oil trade from Southeast Asia to South Asia.
A narrowing in the tonnage supply-demand gap beginning in late 2018, as well as restrained ordering are expected to boost an anticipated recovery in the chemical shipping market, according to the latest edition of the Chemical Forecaster, published by global shipping consultancy Drewry.
Drewry estimates that the global chemical trade will grow at 3.3% in 2017, in part due to the strong vegetable oil trade from Southeast Asia to South Asia. A recent reduction in US exports due to Hurricane Harvey, which had a negative impact on the chemical shipping trade, is expected to be only temporary. Trade should return to normal patterns when North American plants resume production, the forecast predicts.
Also, ton-mile demand of chemical commodities is expected to grow at 3.8 percent on a year-on-year basis in 2017, of which the organic trade is likely to grow only at 1.5 percent, Drewry estimates. By contrast, inorganic and vegoil ton-miles are expected to grow by 6.3 percent and 6.5 percent, respectively.
Chinese demand for methanol has been improving during the second half of the year as methanol-to-olefins (MTO) plants either plan to ramp up or resume production, according to Drewry. Ten new MTO plants are coming on stream in the second half of this year, with another two expected to begin operations early in 2018.
Additionally, one methanol plant in Iran and two plants in the U.S. are to come online by the end of 2017, so Drewry said it expects moderate growth in the global methanol seaborne trade, especially in long-haul and domestic trade routes in China.
Time charter rates picked up in the third quarter of 2017, supported by strong demand for clean petroleum products and palm oil, Drewry reports, also stating that robust demand, high fuel production and declining fuel inventories should strengthen the clean product tankers market from the fourth quarter to 2018.
“The chemical tanker fleet is oversupplied, and increased demand in the CPP (clean petroleum products) market will attract more swing tankers to move to the CPP trade,” Hu Qing, Drewry’s lead analyst for chemical shipping, said. “Overall, we expect earnings to improve over the medium term.”
Drewry: Global chemical trade to rise 3.3% this year
