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The chemical tanker market is among those with the highest newbuilding potential and Chinese yards have improved their expertise rapidly, American Bureau of Shipping (ABS) says. Accordingly, the classification society intensifies it’s efforts in the country
Growing attention on the need to renew the global chemical tanker fleet has seen Chinese shipyards concentrate on this specialized[ds_preview] market segment. According to data from shipbroker Clarksons published in 2015, the industry is expecting a significant replacement demand for chemical tankers, especially in the size range of up to 20,000 dwt. 3,543 chemical tankers are employed globally, and 20% or about 700 of them are older than 20 years.

Where previously a maximum 25-years age limit applied to chemical tankers, this has fallen to 20 years, and 15 years is becoming the age limit targeted by charterers. It is this trend that underpins the prediction that 800 vessels in the range of 1,000 to 20,000 dwt will need to be replaced and that within the next 10 years, the industry could expect as many as 1,200 to 1,500 chemical tanker newbuilding orders. In addition, regulations for tankers are becoming more and more stringent, with EEDI, Marpol IV – Tier III and the Ballast Water Management Convention, to mention just a few.

»In the recent past, China has made recognizable improvements in the construction quality of specialized vessels and especially in the construction of stainless steel or coated chemical tankers. Given that shipyards in South Korea and Japan, which have the necessary experience in this sector, have full orderbooks with no slots available in the foreseeable future, Chinese shipyards are expected to become more and more relevant to building in this sector. There also is a price differential between South Korean and Japanese yards on the one hand and Chinese yards on the other,« ABS representatives said during an expert conference in Hamburg recently. The knowledge on stainless steel products for chemical tankers would be rapidly increasing throughout the country.

With the Chinese yards’ capability of building sophisticated duplex stainless steel (SUS 2205) multi-tank chemical tankers, a large number of vessels are now on order or under construction, with which the yards hope to gain increased technical and production experience. Several manufacturers of stainless steel – Shanghai Metal Corporation, Baosteel, Jiangsu Steel, Tisco, and several others – already are established in China and are producing steels from SUS 304 to SUS 2205.

Several yards still prefer to import steel from Europe or Japan. To compensate for the lack of bevelling, bending or cutting equipment for stainless steel products at the majority of Chinese shipyards, several third-party workshops have been established to cut and shape the steel. »Most find that the quality of this work is comparable with other well-established sources of stainless steel construction,« the ABS’s experts said.

According to China Classification Society (CCS), 232 chemical tankers have been built in China so far, with another 57 on order today. In response to numerous inquiries requesting training courses in this area ABS has established several services to provide technical and operational support for the shipping industry. The classification society also has established a dedicated local team of technical specialists who support the shipbuilding industry with engineering and operational know-how.

»Drawing on its extensive network of industry contacts, including shipyards, designers, shipbrokers and finance houses, we provide support in identifying suit­able Chinese-built vessel designs. We also provide decision support through performance evaluation using techniques including computational fluid dynamics to enable analysis of the most applicable operational parameters,« the ABS adds.

To attract new international clients, Chinese yards have some instruments for financial assistance up their sleeves. The Chinese government does not give direct financial support to foreign owners. »However, it had run a long-term development plan for the shipbuilding industry for more than a decade. The Export-Import Bank of China (IEBC) and China Development Bank (CDB) are two financial government arms to assist China’s shipbuilding exports. They provide finance to foreign owners who build their ships or offshore units at Chinese shipyards at favorable interest rates. All other commercial banks are also able to provide financing to foreign companies based on their criteria, which include background of the company, financial credibility and status, charter contract, market outlook for the vessel type and default payment insurance etc,« ABS expert Stein Nilsen explains.

With the arising risk in the poor marine and offshore market, Chinese banks however become more prudential in lending money. »Willing to take risk and expecting higher financial return, Chinese leasing companies are more popular as an alternative financial source for foreign owners, especially those medium and small companies. The shipbuilding group China State Shipbuilding Corporation has its own leasing company – CSSC Leasing. It helps the shipyards under CSSC to win new orders by providing financial support to the shipowners,« Stein explains. It is understood that their requirements are not as stringent as those of banks, but they require higher financial return for the financing scheme.
Michael Meyer