08 October 2012 12:31 [Source: ICIS news]
BUDAPEST (ICIS)--The European chemical tanker shipping market is not likely to witness an upturn for at least another five years, sources said on Monday.
Speaking on the sidelines of the 46th annual European Petrochemical Association (EPCA) meeting in Budapest, Hungary, market participants said they did not expect to witness a resurgence in demand for the shipment of chemicals until the global economy picks up.
“We are now realistically looking at 2017 as the year when freight rates will raise to a level considered healthy,” one shipowner said.
With plenty of open tonnage still lying idle in Europe and competing for the minimal levels of cargo enquiries in the spot market, a ship broker agreed with this outlook.
“As demand for the shipment of chemicals is still at a low level, there is still intense competition for enquiries among ship operators,” he said.
Persistently high crude oil prices continue to maintain an upward pressure on the cost of bunker fuel, leaving shipowners with spiralling operating costs.
However, for many voyages within Europe freight rates still remain well below breakeven levels, and in some cases barely cover operating expenses, another shipowner said.
Companies continue to look to streamlining measures, mergers and acquisitions in order to improve margins.
Although there are signs of a slight pick up on certain routes, sources expect these measures to continue in the imminent future, until the world’s economy finds a way out of the recession it is currently faced with.
The annual EPCA meeting runs from 6-10 October.
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