Odfjell SE (Bergen, Norway) expects the chemical tanker market to remain robust in the third quarter of 2024, even as spot rates have begun to decline since the end of the second quarter, following typical seasonal trends.

The company, a key player in the chemical tanker and tank terminal sector, reported a slight decrease in metric ton per mile demand, attributing this to increased vessel capacity in the Panama Canal, which has led to the international trade route returning to more normal transit levels. As a result, "average sailing distances are expected to decline somewhat," Odfjell noted.

Despite these adjustments, freight rates remain "at historically elevated levels," the company emphasized, though they have moderated slightly from recent peaks.

Odfjell posted a net profit of $88.2 million for the second quarter of 2024, a sequential increase from $67.8 million in the first quarter and a significant rise from $52.6 million in the same quarter of the previous year. The company’s revenue also grew, reaching $351.7 million, up from $326.9 million in the first quarter and $319.7 million in the prior-year period.

In the first half of 2024, chemical export volumes west of the Suez Canal, excluding the US Gulf Coast, were "somewhat muted," Odfjell reported. "Overall, the market west of Suez was flat compared to the previous quarter, but trade lanes from the USGC to the Far East and Europe experienced a weakening trend," the company stated in its quarterly results presentation.

East of Suez, export volumes were strong in Asia and the Middle East, though demand in China "has been muted for the first half of the year." Odfjell observed that rates in the region remain volatile, with tight supply leading to sudden shifts in tonnage availability, causing rates to "spike or plummet."

The company noted that the balance between supply and demand in the chemical tanker market remains tight. Global seaborne chemical volumes are stable, and swing tonnage levels remain low, despite a slight recent increase. "The market remains tight despite the summer slowdown and increased transit capacity in Panama," Odfjell stated.

With global chemical production expected to grow by approximately 3% in 2024, Odfjell anticipates that chemical consumers will "start preparing for the seasonally busier year-end" as the summer slowdown concludes.

Odfjell’s tank terminal at the petrochemicals hub of Antwerp, Belgium, ended the second quarter with an average commercial occupancy rate exceeding 99%, consistent with previous quarters. The company’s terminals in Ulsan, South Korea, and Charleston, South Carolina, both saw increases in occupancy quarter-on-quarter. However, its terminal in Houston, Texas, experienced a reduction in occupancy, which Odfjell attributed to a softer market. Nonetheless, the Houston terminal successfully renewed a five-year contract with its largest customer, covering 16% of the terminal’s total capacity.

Overall, Odfjell’s terminals averaged a commercial occupancy rate of 96.9% in the second quarter, consistent with prior periods.