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Chemical Tanker ... Typical products are: aromatic hydrocarbons (benzene, xylene etc), alcohols,...

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  • banchero costa

    Aug 2018 – Chemical Tanker Outlook 1

    bancosta blue studies – volume WET 2018/#16

    Chemical Tanker Outlook (an analysis of the IMO I, IMO II and IMO III tanker fleet)

    August 2018

    banchero costa research

    www.bancosta.com ; research@bancosta.com

    banchero costa

    banchero costa

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    Aug 2018 – Chemical Tanker Outlook 2

    1. The Chemical Sector page 3

    2. Fleet Development page 8

    3. Shipbuilding Trends page 23

    4. Detailed Age Profiles page 35

    5. The Demand Side page 40

    6. Charter and S&P Market page 49

    7. Final Words page 53


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    Aug 2018 – Chemical Tanker Outlook 3

    The Chemical Sector (Introduction & Definitions)

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    Aug 2018 – Chemical Tanker Outlook 4

    A Chemical Tanker is a specialized type of tanker ship designed to carry liquid chemicals and vegetable oils in bulk. They are distinguished from other tankers due to the fact that the cargoes they carry require special handling and storage procedures.

    Chemical cargoes are usually shipped in small parcels of about 1,000-6,000 tonnes. Due to economic reasons different cargo parcels are often combined on the same vessel. Therefore larger chemical tankers usually have numerous tanks (often more than 20) with separate loading/discharging equipment each capable of carrying a different chemical product without risk of mixing. Tankers with numerous separate tanks are usually referred to as ‘parcel’ tankers.

    All chemical cargoes are classified according to their carriage requirements as defined in the International Bulk Chemical Code. International regulations impose strict rules as to the design of the ship used, equipment on board and handling procedures according to the requirements of each specific cargo type.

    Broadly speaking, liquid chemical cargoes are assigned IMO (International Maritime Organisation) grades depending on their level of flammability, toxicity, corrosiveness and reactivity. These grades are on a scale of I, II and III from more hazardous to less. Tankers can be certified for the carriage of cargoes of a certain grade on the basis of required technical features such as appropriate tank coating/material and the location of the cargo tanks on the ship.

    Type I cargoes, which are relatively rare, are not biodegradable and if released in the sea would build up in marine organisms. Parcel tanks approved for the carriage of these chemicals must have a double skin and be located not less than one-fifth of the ship’s breadth from the ship’s sides measured at the water line. Given that chemical cargoes are often particularly hazardous, tanks of chemical tankers are either coated with specialized coatings such as; phenolic epoxy, zinc paint or marineline; or made or covered of stainless steel.

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    Aug 2018 – Chemical Tanker Outlook 5

    The coating or tank material again determines the type of cargo the ship can carry – more demanding cargoes such as phosphorus or acetic acid require stainless steel tanks or marineline coating, corrosive acids such as phosphoric acid are generally limited to stainless steel only, whilst easier cargoes such as vegetable oils or ethanol can easily be carried in epoxy coated tanks.

    Vegetable oils generally require IMO II certification but epoxy coating is sufficient, and numerous ships are designed specifically for these trades, where parcel sizes are also often quite large. Triangulations with clean products are possible. Newbuilding non-IMO II MR tankers also can carry vegoils as their first ever cargo.

    On the other hand, the standard for ‘sophisticated’ parcel chemical tankers is to be fully ST/ST. This allows not only for corrosion protection but in particular also allows for easy cleaning and deodorizing of the tanks to very high temperatures, and no risk of absorption by previous cargoes, in order to ensure cargo purity.

    Marineline coating has most of the properties of stainless steel at a potentially lower cost. Being particularly hard and slippery, this coating is very easy to clean to a high standard.

    It’s been a popular option for newbuilding in recent years, but remains a relatively new technology with a limited track record.

    The general rules are: Epoxy coatings possess a good resistance against alkalis, seawater, wine, vegetable oils, crude oils, gas oils, lube oils, jet fuels, gasoline and also weak acids (as in free fatty acids in vegetable oils, but acid value should not exceed 20-40). Epoxy has limited resistance against aromatic hydrocarbons ("solvents" such as benzene, toluene), certain alcohols, ketones (acetone) and some esters.

    Epoxy is sometimes indicated as resistant also to stronger acids. This may be correct, but as an applied coating one must count on "holidays" in the film, thus making epoxy unsuitable for really corrosive liquids.

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    Aug 2018 – Chemical Tanker Outlook 6

    Zinc silicate coatings particularly those of inorganic type, are very resistant against strong solvents and normally tolerate higher temperatures than epoxies. Typical products are: aromatic hydrocarbons (benzene, xylene etc), alcohols, ketones.

    Zinc silicate coatings may, under some circumstances, cause zinc pick up into the cargo. They are therefore not normally suitable for edible oils for human or animal consumption, because the contents of free fatty acids may increase during transport, and also jet fuels may suffer zinc "pick up" from the coating to an extent which is considered a contamination. Zinc silicates are not resistant against acids or alkalis. Zinc silicates are only partly resistant to chlorinated compounds. If the water content is high hydrochloric acid may develop, which will attack the coating. In a similar way hydrolysable hydrocarbons such as esters, acetates and halogenated compounds may attack the cargo. Alkaline tank cleaning agents (caustic) should never be used in zinc silicate coated tanks. Considerable damage can be done in one single cleaning operation. Zinc silicates stand well up against other cleaning agents such as "solvent cleaners" and "emulsifiers" unless they have alkaline additives.

    Tank cleaning is also extremely important after discharging cargo, as tanks not properly cleaned of all cargo residue could adversely affect the purity of the next cargo loaded. Often, tankers must also comply with “last cargo” regulations to prevent any possible contamination, which can be a problem on some trades.

    The boundary between a chemical tanker and a product tanker is not easily defined, beyond the definitions of tank coating and IMO grade classification. Obviously, a high specification vessel with stainless steel tanks and IMO II certification has all the interest to carry only high-requirement cargoes as it can earn much higher premiums on such employment. However, many lower-specification vessels can potentially switch at will between mainstream oil product trades such as gasoline and certain easier ‘chemical’ trades.

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    Aug 2018 – Chemical Tanker Outlook 7

    Many tankers which were ordered with the clear intention of being used primarily on traditional ‘product’ trades have been built to a higher specification making them IMO III or even IMO II level. All this, together with an incomplete and not very accurate fleet data (large numbers of ‘unknown IMO’ units) can make it difficult to accurately portray the size of the chemical tanker fleet.

    In general, IMO I and IMO II grade tankers are most commonly referred to as proper chemical tankers, whilst most IMO III ships are more often described as product tankers.

    Given the constraints above, for the purpose of this study we have considered as chemical tankers all tanker ships with an IMO classification of I, II or III and either stainless steel tanks or either marineline, zinc, or epoxy coating.

    In this study we only consider ships of between 1,000 and 30,000 dwt. We do not include larger ships also because it is particularly difficult to differentiate them from product tankers, especially when it comes to the orderbook where detailed technical specs of the vessels are often not available.

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    Aug 2018 – Chemical Tanker Outlook 8

    Fleet Development (Deliveries, Demolitions & Fleet Growth)

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    Aug 2018 – Chemical Tanker Outlook 9

    Over the next few slides we will illustrate the current situation of the chemical tanker fleet, in terms of number of trading units, total deadweight, the orderbook, and projected fleet growth.

    According to our calculations, the IMO I, II and III chemical tanker fleet of units of 1,000-30,000 dwt amounts to about 2,675 units as August 2018, for a total of 29.5 mln dwt.

    As can be seen in the pie chart on slide 10, more than half of the fleet are of ‘small’ size below 10,000 dwt. Around 40 percent of the fleet is of a size between 10,000-20,000 dwt, and only about 8 percent is above 20,000 dwt. However, units over 20,000 dwt account for approximately 18 percent of capacity in deadweight terms.

    In 2017 we recorded the delivery of 18 larger, 26 medium and 39 smaller chemical carriers compared to 20, 33 and 26 the previous year. Overall deliveries slowed to 1.07 mln dwt from 1.18 mln dwt in 2016. In 2018, assuming no slippag

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