Rates to ship LPG on very large gas carriers (VLGCs) continue to soften.
After reaching a 2015 high of USD137.938/tonne on 15 July, rates averaged USD115.875/tonne on 29 July, working out to USD117,540 in daily earnings at current bunker prices in Fujairah.
A Singapore-based broker told IHS Maritime that weak trades for August, coupled with traders reletting owned tonnage into the market and the delivery of newbuildings, are pushing rates down.
“Traders have been refraining as they expect weak LPG demand in summer and they still think current freight rates are too high,” said the broker.
Norwegian broker Lorentzen & Stemoco said, “We can see more ships, including another newbuilding, adding to the considerable fleet list available for dates in the second half of August. At the same time, there are probably not that many available cargoes left for the second half of August. Traders are holding back as much as they can with the current shipping rates still at lofty levels.”
Related news:VLGC rates dive as traders relet ships
IHS Maritime’s Sea-web.com data show nine VLGCs will be delivered from July to August, comprising four ships from Dorian Hellas, two ships from Stolt-Nielsen, and one ship each from BW Group, Transpetrol, and Petredec.
Oil Price Information Service said that cost-and-freight LPG prices (on the basis of delivery into Japan) averaged USD441/tonne on 29 July, a USD11 drop from 28 July.
Although naphtha is priced about USD476/tonne on a similar delivery basis, the price differential is insufficient to convince petrochemical producers to switch to LPG.
Spot vessel rates for Algeria, West Africa, and Houston, Texas, to Japan declined to USD190.75/tonne, USD194/tonne, and USD281/tonne respectively, compared with USD215.50/tonne, USD220.50/tonne, and USD320.50/tonne on 23 July.