Global petrochemical volume movements have been increasing but if you speak to many in the industry they’d describe the market as “quiet” and feel that the market has softened over the last couple of years. This downbeat sentiment is compounded by the drop in freight rates over the same period as they seem to be constantly under pressure. Simply put, the biggest culprit is the over-supply of tonnage. With newbuild deliveries, the global fleet has grown more than the increase in global demand can absorb, and due to economies of scale the average size of each vessel being delivered is getting larger. With more than sufficient tonnage available quite a few spot deals are done off market supporting the perception that the activity is very quiet, so any enquiries seen in the market receive competitive rates. ​ Taking the north/southbound trade lane in Asia as an example, we can see over the last 2.5yrs volumes have grown year-on-year when comparing each quarter. ​Comparing 1H 2015 vs 2016 and 1H 2016 vs 2017 we can see the collective north and southbound volume has increased 2.1% and 1.8% respectively. Last year the global chemical fleet under 30,000dwt had to absorb an extra 78 vessels, totalling 1.2M dwt, with the first five months dropping 46 vessels (0.6M dwt) into the fleet. The first five months of 2017 we’ve already seen 29 vessels (under 30,000dwt) delivered equating to 0.4M dwt. Even though the amount of newbuild deliveries has come off since last year the market still needs to absorb this compounded amount of tonnage, and with a young fleet there is not much available for scrapping. If everything is delivered we still expect some 70 more vessels under 30,000dwt to join the fleet bringing with it 1.0M dwt and another 84 ships (1.2M dwt) in 2018. Add to this the fact the CPP fleet can switch in and out of the petchem market, causing a trickledown effect as it puts pressure on larger tonnage that then starts to compete in trade lanes operated by smaller tonnage, then the likelihood that demand would be able to absorb and accommodate too much extra supply will be slight and we can expect rates to feel the pressure a little longer. ​mical vo