Key developments With 14 vessels within its fold after a r a t i ona l i sa t i on exe rc i se , MI SC’s Chemical shipping business segment possesses one of the smallest fleets within the Group. Over the course of 2015, this segment renewed multiple contracts of affreightment (COA) and term shipping contracts with oil majors and leading chemical manufacturers that helped secure stable revenue and mitigate rate volatility. Moving forward Amidst a weak global economy characterised by low oil and commodity prices, the seabor ne volume of petrochemical products is expected to remain subdued while a weaker spot market will offer only short-term opportunities for certain sectors. However, the expected rebound in demand for chemical products and increased trading activities will help support the recovery of rates. While the outlook for the chemical tanker market segment is expected to be similar to 2015, we can expect a very modest uptrend in freight rates and earnings in 2016. In the medium-term, chemical tanker market dynamics will remain vulnerable due to higher fleet growth of IMO Medium Range tankers which are due to be delivered between 2016 and 2017. However, the upcoming expansion of refineries and the extended capacity of petrochemical plants in the Middle East, China and India between 2016 and 2020, bodes well for increased exports and the movement of products. Coupled with the increasing production and the export of vegetable oils from Southeast Asia, we anticipate regional market growth on a long-term basis. Our Chemical shipping business segment will continue to focus on its targeted niche and specialised chemical and palm oil shipping market. The business will also continue to focus its efforts on maximising revenue and cost optimisation with its current rationalised fleet. MISC BERHAD Annual Report 2015 61
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