[ID] => 9247
[post_author] => 34
[post_date] => 2018-02-27 09:04:38
[post_date_gmt] => 2018-02-27 09:04:38
[post_content] => The chemical tanker market improved late in 2017, according to Odfjell. There were some short-term effects behind that uptick: demand for chemicals was seasonally strong and an arbitrage opened up for benzene on backhaul routes out of Asia. In addition, a recovery in US refinery runs after Hurricane Harvey eased competition for easy chemicals and vegoil cargoes from product tankers.
Underlying that, though, is a gradual rebalancing of supply and demand. Odfjell notes that, in the ten years from 2008, the chemical tanker fleet grew by an average of 6 per cent per year, while demand grew by an annual average of only 3 per cent. As a result, the market is currently over-supplies with chemical-capable tonnage.
Looking ahead, though, Odfjell expects demand growth to average 4 per cent per year while, based on the current orderbook and likely scrapping activity, the fleet will expand by only 2 per cent per year.
That rebalancing will, though, not happen overnight. “The chemical tanker market is expected to remain challenging in the coming quarters before gradually picking up towards the end of 2018,” Odfjell says. “Volume demand is expected to outpace supply growth in 2018 before an expected recovery could gain pace from 2019. We further believe that tonne-mile demand will outgrow fundamental volume demand.”
Key to this optimistic forecast is a significant increase in cargo from export-oriented chemical plant both in the US and in the Middle East, which will inject new volumes of liquid chemicals into seaborne trade this year and next. Government efforts in China to close down smaller, less efficient and highly polluting chemical plants should support trade flows.
OUT WITH THE OLD
For now, though, Odfjell’s tanker shipping activities remain under pressure, although it is performing better than many of its competitors. For the full year 2017, its chemical tanker operations generated revenues of $842.5m, up 1.2 per cent on 2016, though EBITDA was down 33.4 per cent at $125.0m. As noted earlier, the fourth quarter showed some improvement, with revenues up 2.7 per cent on the previous quarter and up 4.4 per cent on the year earlier figure.
Meanwhile, Odfjell is progressing with its plan to expand its core chemical tanker fleet to 100 vessels. At the end of 2017 it was operating 79 tankers totalling some 2.4m dwt, with stainless steel tanks representing 80 per cent of aggregate carrying capacity. Since then it has redelivered four timechartered vessels: one of 33,700 dwt and three of 20,000 dwt. During January and early February it took delivery of nine modern tankers: two 40,900-dwt units under commercial management for Sinochem and another under bareboat charter, a leased 25,000-dwt newbuilding, a timechartered 25,000-dwt newbuilding, and four more 2016-18 deliveries for the tanker pool it has set up with Sinochem.
That pool includes four 40,900-dwt chemical tankers on long-term bareboat charter to Odfjell from Sinochem and another four owned by Sinochem and under Odfjell management. Odfjell has purchase options on the four bareboat vessels.
“These vessels will replace a large part of our maturing chartered-in fleet with modern and more efficient tonnage,” Odfjell says, noting that they are expected to make a positive contribution to its results through lower bunker consumption. Another three newbuildings were also due to join the Odfjell fleet in the first half of the year.
[post_title] => Odfjell: Balancing act
[post_status] => publish
[comment_status] => open
[ping_status] => open
[post_name] => odfjell-balancing-act
[post_modified] => 2018-02-26 15:07:17
[post_modified_gmt] => 2018-02-26 15:07:17
[post_parent] => 0
[guid] => https://www.hcblive.com/?p=9247
[menu_order] => 0
[post_type] => post
[comment_count] => 0
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The chemical tanker market remains challenging but the end of the slump is in sight, if Odfjell's assessment of recent developments is accurate