Rates to ship LPG on very large gas carriers (VLGCs) are inching closer to the USD130/tonne mark, having averaged USD128.156 /tonne on the Baltic Exchange on 29 June.
That had come up from USD121.875/tonne on 22 June. At current bunker prices in Fujairah, the latest rate works out to daily earnings of more than USD130,000.
Although demand for Gulf-Asia Pacific shipments has been muted ahead of Saudi Aramco’s announcement of term prices of LPG for August, it has been buzzing in the US Gulf.
The usual Indian demand and consequent congestion in Indian ports have combined with demand for loadings in the US Gulf to tighten tonnage supply.
On the other hand, the steep freight rates have discouraged Asian traders from moving cargoes from the Gulf.
Among the few reported Gulf-Asia Pacific fixtures, Astomos Energy fixed Gas Al Mutlaa for USD125/tonne for a Ras Tanura-Chiba trip.
Bharat Petroleum Corporation fixed Hisui to load in Kuwait/Abu Dhabi for USD5.4 million while Hindustan Petroleum Corporation fixed Kikyo for USD5.75 million to load in Ras Laffan. Compared with similar fixtures that were done under USD5 million from 15-19 June, recent fixtures reflect the rising freight market.
Pricing agency Oil Price Information Service (OPIS) said traders and importers are reportedly focused on US cargoes.
“Mont Belvieu prices have been low after stocks rose to a record high, and with there being still room to expand on capacity at the terminals, sources suggested that exports may also increase over July,” said OPIS.
Stocks build in the United States increased to nearly 82 million barrels in the week ended on 19 June while Mont Belvieu prices dropped to USD180-190/tonne.
Spot LPG prices, based on delivery into Japan, are approximately USD496/tonne. As naphtha is priced at about USD543.50/tonne, LPG is now more attractive as a petrochemical feedstock.
Spot vessel rates for Algeria, West Africa, and Houston to Japan were approximated at about USD210/tonne, USD215/tonne and USD310/tonne respectively.
On a cost-and-freight basis, it would be cheaper to take LPG from the US Gulf to Asia Pacific than to ship LPG from the Gulf to Asia Pacific.