Chemical tanker earnings to take hit from IMO 2020.

Catogory : Market Report

EARNINGS from the chemical tanker segment are expected to be hit by the new International Maritime Organization rules on fuel, “The IMO fuel regulations will have a significant adverse effect on earnings, that there were many uncertainties, pointing to a challenging future. Out of 4,485 chemical tankers in the market, only 21 vessels have scrubbers, with 76 on order, a further 18 would run on dual-fuel engines. That means 98% to 99% of the fleet would have to burn low-Sulphur fuel oil or marine gasoil, but the ability to pass on the additional costs would be difficult for a period. The added costs from the new regulations could reach as much as $1,800 per day for operators, assuming a fuel spread of $300 per tonne between high and low-Sulphur grades.Shipowners and operators would either have to swallow the extra costs or make it up with a freight rate hike, The uncertainty surrounding Brexit would also have a “definite” impact on chemical tankers. The uncertainties and low rate environment might make room for further consolidation. Unlike chemical tankers, the product and crude tanker segments are expected to benefit from the new rules, The IMO regulations would boost demand growth for clean tankers by another 0.5%, on top of the 3.4% expected in 2019 without the IMO effect, while for so-called dirty tankers, the benefit was an additional 0.7% from estimates of 6.4%. In 2020, the effects would be more stark, with clean tankers adding 2.2% from the IMO effect on top of a 3% demand growth estimate for clean tankers, while dirty tankers would see a 2.9% uplift from the IMO rules versus an existing demand growth forecast of 1.6%.