Rates to haul LPG on very large gas carriers (VLGCs) may be heading north, but the situation could change from 2016, a shipbroker cautioned.
Speaking at IHS Asia LPG Seminar in Singapore on 16 June, Lorentzen & Stemoco’s Gas Department director Anders Lalim said, “The fleet utilisation rate now is more than 90%. The situation today is very similar to what we saw for oil tankers in the 1980s and 1990s. At that time, more than 90% of crude came from the Gulf. Today, crude comes from West Africa and Venezuela too, giving opportunities to traders and arbitrage giving rise to all sorts of movements.”
Furthermore, the US shale gas revolution has resulted in LPG exports from the US Gulf.
From zero exports in 2000, the US Gulf exported 14 million tonnes of LPG in 2014. That figure is set to rise to 30 million tonnes in 2017.
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The Gulf, which accounts for majority of LPG supply, will also export more. It is expected to export 37 million tonnes of LPG in 2017, up from 34.6 million tonnes in 2014.
With LPG being shipped from the Middle East and US Gulf, tonnage supply is tight.
However, Lalim warned, “Pressure on rates could come from a large influx of newbuildings. The Panama Canal expansion could also reduce the round-voyage duration by a month.
“We expect fleet utilisation to come down in the years to come as we have a big orderbook, but this also depends on where [the] LPG is transported. At the end of the day, it is difficult to predict the future.”