With China accounting for approximately one-third of global organic chemical imports, particular emphasis is placed on the fall in Chinese demand for chemicals as a key factor impacting the global market.
Seaborne trade in chemicals and associated products fell by 1.2% in volume terms in 2014, with the decrease attributed to the overall weakness in the Chinese and European economies last year, Drewry noted.
“Uncertainty over the economic outlook and the recent fall in oil prices and its impact on plans for new petrochemical plants in the short term, are likely to restrain trade growth in 2015,” said Nazneen Fatima, lead analyst for chemical shipping at Drewry.
On the supply side, while the rate of new ordering in the chemical shipping sector has moderated, the total chemical capable fleet grew by 4.4% in 2014 and with a current orderbook of 10.2m dwt, further increases in supply will take place in 2015.
Drewry estimated the net increase in the size of the chemical fleet in 2015 is likely to be around 7%, taking into account vessel scrapping and the loss of IMO certificates of fitness.
Given that changes in vessel demand and supply are likely to be out of line for much of the year, freight rates will remain under pressure.
“Our chemical freight rate index dropped for much of 2014, before a brief rally at the year end. Our expectation is that average rates for 2015 will be lower than average rates in 2014. But in 2016 the market will begin to recover as supply growth moderates,” said Fatima.
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