CHEMICAL TANKER MARKET SIZE AND SHARE ANALYSIS - GROWTH TRENDS AND FORECASTS (2024-2031)

Market Size and Trends

The chemical tanker market is estimated to be valued at USD 36.16 Bn in 2024 and is expected to reach USD 49.21 Bn by 2031, growing at a compound annual growth rate (CAGR) of 4.5% from 2024 to 2031.

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Inflation and rising energy demands are driving the greater seaborne trade of crude and petroleum products. The expansion of the global petrochemical industry has also increased the demand for the transport and trade of commodity and specialty chemicals via tankers.

The chemical tanker market trend has been positive over the past few years. As global petrochemical consumption increases steadily, chemical tankers continue experiencing high vessel utilization rates and freight rates. Furthermore, international trade policies could play a key role in shaping the future of global supply chains and petrochemical trade flows. The overall market momentum remains upbeat, supported by robust economic growth across major developing regions.

Growing Demand from the Petrochemical Industry

The petrochemical industry has been experiencing significant growth over the past decade driven by the increasing consumption of plastics and chemicals globally. For instance, in August 2023, India's chemical and petrochemical (CPC) industry held a significant position in the world market, worth 178 USD Bn, and it is expected to grow to about 300 billion USD by 2025. A large portion of petrochemical products are transported via chemical tankers as seaborne transportation is the most feasible option for their bulk transportation over long distances. As global petrochemical production continues to expand to meet the rising demand from end-use industries such as packaging, construction, and automobiles, it will invariably lead to higher volumes of petrochemical volumes being shipped internationally via tankers. Several key petrochemical producers are investing heavily to expand and build new facilities across major markets. For instance, Saudi Aramco has ongoing projects to develop massive petrochemical complexes along its eastern coast to gain advantages from low feedstock prices and access to Asian markets. Similarly, plans are underway in the U.S. to build new crackers on the Gulf Coast enabled by abundant shale gas. As more petrochemical capacities come online globally in the coming years to capitalize on emerging opportunities, it will support the growth of petrochemical seaborne trade volumes and positively impact the demand for chemical tankers.

Market Concentration and Competitive Landscape

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Starting from January 2020, the International Maritime Organization has imposed lower global sulfur cap of 0.50% m/m on bunker fuel used across all commercial shipping fleets. This is aimed at significantly reducing vessel-related air pollution and compliance is mandatory for ship operators. To adhere to the new regulations without having to install expensive exhaust cleaning systems, ship owners largely opted to switch to low-sulfur fuels from high-sulfur fuel oil or marine gas oil. However, low-sulfur fuel is more expensive compared to high-sulfur fuel and shipping companies have faced considerable increase in their operating costs which was already a tight margin business. Faced with rising costs, shipping lines are trying to pass on higher freight rates to cargo owners and are rationalizing their fleets to bigger tankers that can achieve economies of scale and efficiency. This is inducing replacement demand for new buildings and pushing older tonnage to scrapyards prematurely. Ensuing fleet renewal and capacity replacement is generating fresh demand for chemical tankers in the market. Despite short-term supply chain disruptions caused by the COVID-19 pandemic, the long-term impact of IMO 2020 regulations will continue supporting the chemical tanker sector.

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The chemical tanker market faces many challenges. Stricter environmental regulations aim to reduce pollution from tankers, requiring investments in cleaner fuels and emissions scrubbers. This increases operating costs. Other challenges include geopolitical risks from shipping through volatile regions, and boom-bust cargo cycles that lead to oversupply when chemical demand is low. Tanker owners struggle with high new building costs and debt payments during downturns. Additionally, the pandemic reduced chemical and oil consumption in 2020, lowering tanker freight rates and vessel utilization.

 Market Opportunities: Growing chemical industry

The demand for tankers is correlated with the larger chemicals industry. As population and standards of living grow across Asia Pacific and elsewhere increase, the demand for petrochemicals is expected to rise.

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In terms of product type, organic chemicals contributes 45.6% share of the market owing to rapid growth in industries where organic chemicals are extensively used such as pharmaceutical, agriculture, and food processing among others. Organic chemicals find widespread application as raw materials, intermediates and final products in these core industries. The global pharmaceutical industry has been growing at a healthy pace over the past few years on the back of rising healthcare spending, an aging population, and strong drug pipelines. This has driven significant demand for various organic chemicals used in manufacturing APIs and formulations. Similarly, robust expansion of the global agriculture sector supported by increasing crop cultivation areas and adoption of advanced farming techniques has boosted consumption of organic agrochemicals such as fertilizers and pesticides. Growing health consciousness among consumers has also augmented demand for processed and packaged food products, benefitting producers of preservatives, flavor and fragrance chemicals which largely depend on organic compounds. Furthermore, rapid industrialization along with infrastructure development activities underway across developing regions provide an impetus to manufacturing industries, further necessitating organic chemicals as intermediate goods. These favorable macroeconomic forces have been the primary drivers behind the organic chemicals segment's dominant position in the overall chemical tanker market. Growing infrastructure development in India is expected to drive the segment growth. For instance according to data published by Invest India in 2023, cumulatively, the collective development of India's infrastructure propels India's economic growth.

 Insights, By Fleet Type: IMO 2 Segment Dominates Due to Cost Benefits over Alternatives

In terms of fleet type, IMO 2 contributes 35.3% share of the market owing to its optimal balance between transportation efficiency and cost effectiveness over other fleet types. IMO 2 tankers, having a DWT capacity between 5,000 to 80,000, offer economies of scale allowing operators to transport larger volumes of chemicals at relatively lower unit transportation cost compared to smaller IMO 1 tankers. At the same time, IMO 2 tankers are more maneuverable and accommodate at more ports when compared to very large IMO 3 tankers which are generally deployed for long-haul trades. Their multi-purpose utility makes IMO 2 tankers highly preferable for short-sea, coastal and regional chemical transportation where frequent port calls are involved. Furthermore, IMO 2 vessels offer savings on crewing and maintenance costs due to larger crew accommodation and multi-cargo handling capabilities.

 Insights, By Fleet Size Type: Deep Sea Tankers are Fulfilling the Expanding Global Trade Demand

In terms of fleet size Type, deep sea chemical tankers (10,000- 50,000 DWT) contributes 36.5% share of the market owing to growing cross-border chemical trade volumes. Post containerization, chemical transportation demand has significantly shifted from traditional bulk trades to several hub-and-spoke long-haul routes connecting major producer and consumer economies globally. Deep sea tankers are specifically designed for carrying chemicals across oceans while meeting stringent safety, environmental and material compatibility standards. Their large cargo capacities allow operators to achieve substantial economies of scale through consolidation of regional cargoes. Deep sea trade lanes connecting North America, Europe, and Asia Pacific have emerged as key growth generators for the sector where demand is met through periodic deployment of deep sea fleet. As chemical production and consumption centers in emerging countries continue to expand rapidly, deep sea vessels are indispensable in facilitating efficient exchange of feedstock and finished products on the world stage. Their critical role in lubricating globalization drives sustained investment into deep sea chemical tankers, safeguarding this segment's prominent position.

Regional Insights

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The North America region has dominated the global chemical tanker market for decades with a market share 47.3%. With a well-established petrochemical industry centered on the Gulf Coast, North America requires significant tanker capacity to transport chemicals both domestically and internationally. Major hubs like Houston and New Orleans see huge quantities of product shipped routinely on tankers of all sizes. The size and scale of petrochemical facilities in the region has given North American operators tremendous bargaining power. Tanker companies with dedicated vessels serving regional routes are able to guarantee capacity and optimize fleet deployment. This reliability and consistency has allowed North American producers to run facilities at maximum rates knowing transportation will not constrain output. Pricing in many trades is influenced considerably by these dynamics.

Asia Pacific trades feature more diverse routings and more complex logistical requirements compared to North America. Tanker operators have rushed to add tonnage in order to capitalize on the market opportunities. Fleet development in the region has evolved year-by-year to keep pace with shifting trade lanes as production capacity shifts between countries. Although intra-Asia Pacific transport has grown the most, longer-distance exports to markets like North America and Europe have also increased steadily. As a result, chemical tankers engaged in Asia Pacific are now exposed to a wider variety of commercial and operational conditions than ever before.

Market Report Scope

Key Developments

• In November 2021, Odfjell, a company specialising in worldwide seaborne transportation and storage of chemicals sannounced the disposal of its last short-sea vessels in the Asia Pacific market to focus on its core deep-sea chemical tanker business. The disposal of vessels at sea is regulated under specific conditions to prevent harm to the ocean environment. Vessels should only be disposed of at sea when land-based alternatives are not available.
• In November 2021, Hafnia Ltd., affiliated with BW Group, acquired a fleet of 32 modern and fuel-efficient IMO II tankers from Oaktree Capital Management's Chemical Tankers Inc. This acquisition included various types of tankers such as MR, Handy, and Intermediate vessels, enhancing Hafnia Ltd.'s commercial activities and trading flexibility.
• In July 2021, Aurora Tankers, a subsidiary of IMC Industrial Group, formed a strategic partnership with Golden Stena Baycrest Tankers (GSB) to manage and operate stainless steel chemical tankers. The partnership aimed to expand across the Asia Pacific region for the two companies, focusing on the J19 stainless steel tanker segment.

*Definition: The chemical tanker market involves the sea transportation of chemicals and chemical products in dedicated and specialized tonnage vessels known as chemical tankers. Chemical tankers are used to carry bulk liquid chemicals in separate cargo tanks or compartments. They are specially designed and fitted with specific equipment to load, transport, and discharge a wide range of liquid chemicals and chemical products safely between manufacturers or production facilities and end users globally.

Market Segmentation

•  Product Type Insights (Revenue, USD Bn, 2019 - 2031)
  • Organic Chemicals
  • Inorganic Chemicals
  • Vegetable Oils and Fats
•  Fleet Type Insights (Revenue, USD Bn, 2019 - 2031)
  • IMO 1
  • IMO 2
  • IMO 3
•  Please Size Type Insights (Revenue, USD Bn, 2019 - 2031)
  • Inland Chemical Tankers (1000-4999 DWT)
  • Coastal Chemical Tankers (5000-9999 DWT)
  • Deep Sea Chemical Tankers (10,000- 50,000 DWT)
• Regional Insights (Revenue, USD Bn, 2019 - 2031)
  • North America
    • U.S.
    • Canada
  • Latin America
    • Brazil
    • Argentina
    • Mexico
    • Rest of Latin America
  • Europe
    • Germany
    • U.K.
    • Spain
    • France
    • Italy
    • Russia
    • Rest of Europe
  • Asia Pacific
    • China
    • India
    • Japan
    • Australia
    • South Korea
    • ASEAN
    • Rest of Asia Pacific
  • Middle East & Africa
    • GCC Countries
    • Israel
    • Rest of Middle East & Africa
• Key Players Insights
  • JO Tankers
  • IINO KAIUN KAISHA Ltd.
  • Eitzen Chemical
  • Tokyo Marine Asia Pte Ltd.
  • Berlian Laju Tanker
  • Nordic Tankers
  • Seatrans chemical tankers
  • Navig8 Chemicals
  • Stolt-Nielsen Ltd
  • Odfjell