Port congestion in India means that up to 5% of the global VLGC fleet’s transport capacity is held up there and, despite major investment plans, the situation is unlikely to change in the near future, shipping analysts at Pareto in Oslo said.
“Theoretical port capacity should be in the 5.0-6.0 million tonnes per annum region, with last year’s imports of 8.1 million tonnes sharply exceeding the 5.5-6.6 million range seen in 2011-13. Terminals operate on 140%+ utilisation at the moment, with the current run-rate suggestion being almost twice as high as where conservative capacity-estimates are at,” said Eirik Haavaldsen and Oystein Dalby, the analysts.
Capacity at the terminal in Kandla near the Gulf will increase by 1 million tonne per annum, and new terminals are being planned in Kochi, Paradip, and Pipavav.
“On our estimates, congestion in Indian ports reduces the VLGC fleet by 3-5% this year, and with the above-mentioned terminals unlikely to have an impact before 2017, this will continue if India is to reach its goal of seeing LPG demand increase to as much as 22 million tonnes [from 18 million tonnes in 2014],” the analysts said in a report on the shipping markets emailed to IHS Maritime.
Meanwhile, Indian authorities have released customs data that showed LPG imports totalling 824,000 tonnes in May this year. “This is up 30% from the 633,000 tonnes imported in May 2014, and gives an annual run-rate of about 10 million tonnes,” they said, adding, “China and India now import more on a combined basis than Asia Pacific-countries Japan and Korea [combined], and we expect growth to continue to be high, resulting in significant congestion in India.”
The market has remained strong and VLGC freight rates have continued to firm, in line with historical seasonal patterns, noted Erik Nikolai Stavseth and Kurt Waldeland, shipping analysts at Arctic Securities in Oslo.
“Spot rates are currently quoted around USD110,000/day, and the Baltic Exchange quote has increased consequently for the last two weeks. Activity in the timecharter market has also increased as of lately, and Dorian [LPG] is reported to have fixed two vessels on long-term charters,” they said in a market report emailed to IHS Maritime.
“According to brokers, Cobra has been chartered to Shell for USD66,000/day while Corsair has been fixed on a three-year timecharter to Exxon at USD45,000/day. We expect freight rates to firm into summer – securing strong cash flows and cash distributions,” the two analysts commented.
This post was sourced from IHS Maritime 360: View the original article here.