Asian chemical freight market stable, while container shipping rates soar

SINGAPORE (ICIS)–Asian chemical tanker freight discussions continued to fluctuate within a narrow band this week, much unlike the strongly bullish sentiment seen in container shipping market.

As long as vessel supply condition differs, such divergent pricing trends between the liquid tanker and container ship markets will likely prevail for some time more, market players said.

This week, shipowners are asking for around $25/tonne to move 3,000/tonne-sized liquid chemical tankers between Korea and mid-China, for H2 December/early January 2021 laycan dates, market sources said.

Although this is up to $1/tonne higher on-week, “this was only for defraying seasonal increases in operational costs, and hardly the outcome of any structural market demand pull,” a shipping broker said.

Many tankers are not optimally utilised and tonnage space is deemed abundant, limiting in turn upside potential in rate movements.

In fact, shipowners’ earlier anticipations that they could leverage on strong Q3 recovery in regional economy to push rates higher “have fallen flat and may not materialise anytime soon either,” the same broker said.

ICIS data shows that the freight rates for 3,000 tonne-sized vessels plying the Korea-to-mid China route had mostly fluctuated within the $23-25/tonne band since August.

This is a far cry from the container shipping market, where rates have “jumped multi-folds in the same period,” the same broker highlighted, amid a severe shortage of both vessel space and container boxes.

For some petrochemical products reliant on container shipping, such as polymers and resins, the  high container freight cost factor have also weighed in on their respective spot market conditions.

For instance, import prices of northeast Asia-origin phthalic anhydride (PA) to India have surged more than 60% between September and November, as Korean makers struggled to transfer sharp increases in container freight costs to customers.

Shortage of shipping containers is also keeping Asian prices and cargo availability of polyvinyl chloride (PVC) more muted than usual, market players said.

As the container ship supply situation may not improve so soon, “the bullish streak in container freight will likely run for longer,” an industry source conceded, adding that this will sharpen the differences between container and liquid tanker even more.

Additional reporting from Adam Yanelli and Jonathan Chou

Focus article by Ai Teng Lim

(Image: Containers at the port of Qingdao, China. Source: Sipa Asia/REX/Shutterstock )