24 December 2010 14:06 [Source: ICIS news]
By Lane Kelley
LONDON (ICIS)--Too many chemical ships will probably continue to chase too few cargoes in 2011, at least in ?xml:namespace>
The main factor behind such pessimism is the continuing "tonnage overhang", to use a shipping phrase. In an already-crowded European market, the addition of newly built chemical tankers this year threatens to make it even greater in 2011.
While the number of new tankers ordered in 2010 fell sharply, many owners are still expected to take delivery next year of vessels they ordered during the pre-2009 boom years.
Many fear that the increase in capacity will undercut any possibility for higher freight rates. European owners worry much more about tanker oversupply than about the prospect of weak demand for chemicals and oil products.
“There are too many ships, rather than a lack of cargoes,” a Paris-based shipbroker said.
European freight rates have shown little or no improvement in 2010 and at times have failed to cover basic running expenses and the cost of bunker fuel. Some European shipowners have refinanced vessels under terms allowing them to pay interest only, deferring total repayment until margins improve.
A shipbroker in
"I can’t see any sign of improvement," the broker said.
Yet the outlook for next year is more optimistic in the
"The environment is getting better," said Joe Pyne, chief executive of Kirby, the largest
Another positive sign came from a
So is the Worldscale Association, which sets worldscale shipping rates. Its rates for next year are set to rise 17-20% on major tanker trades, according to McQuilling Services, a leading shipping consultant.
It is no coincidence that rates are expected to rise at a time when the transport of chemicals made in the
The highpoint came in July 2008, when the value of US-made chemicals reached $61bn (€46m) and then began plummeting with the dollar as the global recession took hold. In October 2010, the latest month available, the total value of US-made chemicals totalled $60bn.
Yet there is still uncertainty in chemical shipping on both sides of the
Much of the gloom stems from a too-slow improvement in freight rates.
Spot rates in the ICIS Americas shipping report for the week ending on 17 December were up about 6% from the same week in 2009 - nothing to celebrate, but still a recognisable increase.
However, not all shippers are seeing the same single-digit percentage increases.
Eitzen, the Norwegian chemical shipper, said freight revenue from its 83-vessel fleet declined 3% in the third quarter of 2010, to $96.1m compared with $99.2m in the same period of 2009.
($1 = €0.76)
Additional reporting by James Mills
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