Despite exceeding USD100/tonne, freight rates to haul LPG from the Gulf to Asia Pacific do not reflect the quiet market in the Gulf.
Reported fixtures do not show any ships being fixed to ship LPG on this route, as most of the available ships for May have been fixed or are ballasting to the west of Suez, where tight ship availability has forced rates to go up.
The Baltic Exchange assessed the benchmark rate at USD101.31/tonne on 11 May, up from USD100.25/tonne on 5 May. That works out to USD96,295 in daily earnings at current bunker prices in Fujairah.
Spot vessel rates for Algeria-Japan and Houston-Japan are at USD166.50/tonne and USD243/tonne respectively, up from USD160/tonne and USD229/tonne last week.
Pricing agency Oil Price Information Service (OPIS) stated that excess LPG supply in the Gulf is weighing on the cost-and-freight and free-on-board market, resulting in little interest for cargoes.
OPIS reported that Abu Dhabi Gas Liquefaction Company (ADGAS) cancelled its sell tender. A tender from Qatari gas producer Tasweeq remains open, but interests are perceived to be low so far.
OPIS said, “The trading margins are not favourable for spot cargoes as the contango between June to July prices is narrow, while shipping rates remain high.”
Norwegian broker Lorentzen & Stemoco noted that the few ships available in west of Suez all reportedly have inquiries against them.
“A West African cargo was due to be awarded on 11 May, more than likely to be lifted on a ship ballasting in from the east,” said Lorentzen & Stemoco, adding that another cargo to be loaded in early June in the US Gulf is also being worked on, and this is likely to reflect the higher rates in the west of Suez.