Rising LPG exports to support VLGC rates

Alternative Sources of Energy, Chartering, Energy, Environment, Fixtures, LPG, Markets, News, Shipping Indices — By on September 11, 2014 at 8:59 AM
A worker checks cylinders of liquefied petroleum gas (LPG). Photo: PA

A worker checks cylinders of liquefied petroleum gas (LPG). Photo: PA

Expanding LPG exports, especially out of the US Gulf, would support freight rates for very large gas carriers at over $100/tonne, said IHS Waterborne Energy. (source: IHS)

As of yesterday, the Baltic Exchange assessed freight rates for the benchmark Gulf-East Asia route at $104.857/tonne, up about 29 cents from Wednesday.

Freight rates have softened since reaching a historic peak of $143.25/tonne on 18 July. With just two new VLGCs delivered this month, freight rates have yet to be affected.

IHS Waterborne Energy, which tracks LPG shipments, noted, “With shipping availability appearing short – especially in light of some 12 cargoes expected to sail west-to-east in the coming weeks – there seems to be little perceived downside left in rates.

“As long as more ships are tied up in the longer tonne-mile voyages, there remains the possibility of periods of extreme tightness in the shipping supply and the consequent run up in rates.” IHS Waterborne Energy also cautioned that shipowners cannot always expect rates to stay high.

This year, rates have peaked twice, only to soften once ships returned to the loading areas. FACTS Global Energy, another LPG-focused consultancy, pointed out that Indian LPG demand is growing and would support shipping demand. LPG is used for cooking and transportation in India.

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