Market Overview and Fleet Size
From 2025 to 2026, the total deadweight tonnage (DWT) of the chemical tanker fleet increased from 136M to 142M. The number of existing ships rose by over 4.6% to 5,635, with newbuild orders for 2026 through 2029 totaling 834 vessels—representing a current fleet orderbook of approximately 17.3%. This growth reflects a confluence of factors, mainly a prolonged period of underinvestment in the chemical tanker sector which resulted in four very strong years for freight markets. The generally high freight markets and weak scrap values continue to support low recycling rates and longer trading life for existing vessels. At the time or writing, roughly 20% of the existing fleet is 20 years or older.
This sharp increase in fleet size is creating concerns about eventual market correction. Similar trends have been observed in the past, where rates have come under pressure due to high volume of new orders entering the market in a short period of time. While the chemical tanker market has experienced remarkable years recently, demand for petrochemicals remains under pressure due to overcapacity, overlayed against weak industrial demand and tighter fiscal policies. Geopolitical risks add to these uncertainties, as companies struggle to navigate more stringent trade policies and increasingly restrictive sanctions on the governments of Russia and Iran.
Geopolitical Landscape
In 2025, the focus was on U.S.T.R.’s Section 301 which looked to support U.S. shipbuilding by targeting China’s dominance in the global shipbuilding industry. The U.S. Government implemented broad reaching charges on Chinese owned and operated tonnage, while sparing most IMO 2/3 operators who had built or were contracted to build in China. China implemented their own iteration of Section 301 which targeted companies traded on the U.S. stock exchanges, which resulted in panic. The tonnage taxes levied by both sides were however short lived, and both parties agreed to a one-year pause as part of a larger trade deal. It is unclear whether the U.S. will re-instate the tonnage tax on Chinese vessels, however recent signals from the administration (Maritime Action Plan - MAP) suggests USTR is pivoting towards a tax on cargo imports, applied to all foreign flagged vessels entering the U.S.A, rather than singling out China specifically.
The more impactful geopolitical questions center around the conflict in the Middle East and disruptions to marine traffic both into and out of the region. The Houthi Rebel attacks on merchant vessels had already placed a strain on capacity, resulting in costly rerouting via the Cape of Good Hope, but with the Gulf potentially cut off from the broader markets, there could be a major realignment of trade flows as consumers adjust supply lines. While most experts are expecting the conflict to be resolved in a short amount of time, a long and drawn-out conflict would have serious economic implications affecting demand for chemical tankers.
Newbuild Fleet Expansion
The chemical tanker segment continues to undergo a significant transformation driven by a surge in newbuild orders. South Korea, China, and Japan remain dominant producers; however, China’s emergence as a global shipping powerhouse is becoming increasingly evident with 71% of the entire IMO 2/3 orderbook contracted in Chinese yards (61% of the stainless-steel order book), segments which have traditionally been dominated by Korean and Japanese yards. While Japan remains the preferred source for stainless steel chemical tankers, with most yards in booked well into 2029, China has been able to capture critical market share.
The advent of USTR Section 301 did slow down the number of new building orders in China, particularly for non-Chinese / Western-based Owners reluctant to place new orders that may otherwise be subject to US port fees. Despite USTR making specific carve outs for specialized tankers, the current administration in the US is anything but predictable, which necessitated a more cautious approach towards contracting new tonnage.
The drive to expand remains strong for investors within China eager to grow their shipping portfolios, specifically for foreign trade. Low interest rates and favorable currency exchanges continue to drive orders, resulting in the emergence of an entirely new segment of owners. While the strong freight markets of 2022-2025 were a driving factor, the larger incentive lies in the ability to earn in foreign currency offshore revenues. All revenue earned in China is subject to a 30% income tax, which can be circumvented by flagging ships abroad and not repatriating the earnings.
Evolution of Ship Design
The general trend has been to build larger vessels with fewer segregations to manage capital cost. The “super segregators” older than 20 years still trading today, average more than 30 tanks. The ships on order earmarked to replace these stalwarts of the bulk parcel trade, average 23 tanks demonstrating a deliberate effort to manage capital cost.
With higher capital costs for construction, the economies of scale continue to change, with notably fewer small ships being built for the regional trades. This can be directly attributed to high costs and traditionally low return on capital. For vessels under 15,000 dwt, the existing fleet averages around 7,000 dwt in size. Based on the orderbook alone, this segment sits at well below replacement level (~65%), and the average deadweight has increased to 9,000, demonstrating a notable increase in vessel size.
Vessels are also being outfitted with smaller engines to consume less fuel and meet future emissions targets. With these smaller engines, vessels are slower. Despite a deliberate push towards new and more responsible fuel-types, 80% of the current orderbook is being built to burn conventional marine fuel.
Company-Specific Overview
All information below and for other companies can be found using our PowerBI, updated with the latest fleet list and other parameters.
Secondhand Market Trends
The secondhand market for chemical tankers declined in 2025, as demand for secondhand vessels eased. This can be attributed in part to lower freight markets but is also indicative of the large order book. The vessels which have been circulated tend to be older and buyers just aren’t there at the sellers’ levels. The number of transactions for modern ships remains low.
The Dark Fleet Comes Under Increasing Pressure
The dark fleet saw rapid expansion since the invasion of Ukraine, which fueled an increase in secondhand values. With these ships becoming increasingly less tradable due to international sanctions, dark fleet vessels are finding their way to the breakers in India, at steep discounts. Should the war in Ukraine end and with that Russia find its way back into the international community, we could see an accelerated scrapping program which would keep scrap prices lower, potentially encouraging longer service lives for aging vessels, not engaged in sanctioned trades.
Future Pricing Dynamics
Should geopolitical tensions ease (e.g., a ceasefire involving Russia and a decisive conclusion in the Middle East), there is speculation that over 10% of the fleet may be forced into the scrap markets, as these ships will be “untouchable” to western charterers and the international banking systems. This would be a welcome development for non-sanctioned owners given the high order book (17.3% of current fleet capacity). This compounded effect could have severe ramifications for vessel pricing in the secondhand markets, particularly when it comes to ship recycling.
New building prices are expected to remain high due to generally high material costs and ever-increasing labor costs. Investors are moving into new building markets such as India to find the next lower cost solution to building ships. History has demonstrated that building chemical tankers suitable for the international trade takes decades as opposed to years, so time will tell how India’s aspirations as a building nation will influence the IMO 2/3 tanker space.
Market Outlook for 2026
The chemical tanker market faces several challenges heading into Q2 2026. While the current conflict in the Middle East is casting uncertainty across markets, structural questions about forward supply and demand are emerging against the backdrop of weaker fundamentals for chemicals and an influx of new capacity.
The shipping markets depend on consistent volume to keep vessels moving. This volume is dependent on robust demand for chemicals and products. After more than a decade of underinvestment in chemical tankers, the markets have experienced a historic four-year run. Geopolitical tensions have manifested into regional conflicts, tighter sanctions against Russia and Iran, and growing trade barriers between even the most established of trading partners, perhaps signaling the end of globalization. With this realignment of policies geared more towards isolationism and protectionism, shipping can expect to see a significant impact on ton-mile and more regionalized trade patterns.
Vessels associated with the energy markets are well-positioned to capitalize from the uncertainty, while chemical rates should see significantly less volatility due to generally weaker demand from key downstream sectors. With more than 400 vessels slated to enter the market in 2026, the markets can anticipate increased competition, particularly for ratable contract volumes.
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By Patrick Quincannon
President and CEO
Quincannon Associates