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Lack of demand to keep chemical tanker market depressed: Stolt-Nielsen

The global chemical tanker market is expected to remain challenging over the next few years due mainly to a lack of demand and freight rates staying at below profitable levels, according to Niels G Stolt-Nielsen, ceo of Stolt-Nielsen Limited.

Lack of demand to keep chemical tanker market depressed: Stolt-Nielsen

The global chemical tanker market is expected to remain challenging over the next few years due mainly to a lack of demand and freight rates staying at below profitable levels, according to Niels G Stolt-Nielsen, ceo of Stolt-Nielsen Limited.

Lack of demand to keep chemical tanker market depressed: Stolt-Nielsen
20 September 2014 - 11:22

Lack of demand to keep chemical tanker market depressed: Stolt-Nielsen

The global chemical tanker market is expected to remain challenging over the next few years due mainly to a lack of demand and freight rates staying at below profitable levels, according to Niels G Stolt-Nielsen, ceo of Stolt-Nielsen Limited.

“The current state of the market is challenging. For other shipping sectors it is usually a case of too many ships, but the chemical tanker market is seeing too little cargoes where volumes are not expected to come in 2014 or 2015. Market conditions are tough,” Stolt-Nielsen told Seatrade Global. He was speaking from Shanghai where the company was celebrating its 20th anniversary of being in China.

In the key area for Stolt-Nielsen of the transportation of feedstock demand has remained depressed for the last six years, with weak economic growth especially in Europe and the US. “Freight rates are not being pushed up, not so much due to the oversupply of ships but because growth in demand is simply not there,” Stolt-Nielsen explained.

China, the world’s second largest economy, is also seeing a slower economic growth rate of 6-7% per annum compared to double-digit percentage growth previously. “Another worrying trend is because of the huge shipyard capacity both in China and (South) Korea, and the abundance of capital out there,” he observed.

“Even before the market has started to recover we are seeing an orderbook growth of 7-8% last year to close to 30% this year,” he said.

While Stolt-Nielsen recorded a second quarter net profit of $30.8m and a first half gain of $49.4m, the results were weaker than what the company had hoped for.

The Oslo-listed and London-headquartered company plans to keep its chemical tanker fleet strength unchanged, at around 150 units. Moreover, the recent slight increase in newbuilding prices has meant that newbuild prices today compared to current shipping rates no longer justify the ordering of new ships.

The leading chemical tanker owner is waiting to take delivery of five 38,000 dwt stainless steel parcel tankers from China’s Hudong-Zhonghua Shipbuilding from December 2015 onwards, from an order placed in late 2012.

Stolt-Nielsen will also take delivery of eight newbuild 83,000 cu m VLGCs from Jiangnan Changxing Shipyard from January 2015, through Avance Gas Holdings which is also part owned by Frontline 2012.

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