Rates to haul LPG on very large gas carriers (VLGCs) have exceeded USD120/tonne as charterers have been fixing ships in both the east and west of Suez.
As at 22 June, the Baltic Exchange assessed the benchmark Gulf-Asia Pacific rate at USD121.875/tonne, up from USD116/tonne on 15 June. Rates have not been this high since August 2014.
At current bunker prices in Fujairah, that works out to daily earnings of more than USD122,000.
Spot vessel rates for Algeria-Japan and Houston-Japan were seen at USD200/tonne and USD295/tonne respectively on 22 June, up from USD198.50/tonne and USD294/tonne on 15 June.
The usual demand from India is lending support to the market. Avance Gas’ Monsoon, which IHS Maritime reported on 22 June as having had trouble finding a charterer after dry docking earlier in the year, was fixed to Indian Oil Corporation (IOC) for USD4.9 million on a lump-sum basis to carry LPG from Yanbu, Saudi Arabia. IOC also fixed Everrich 8 for USD4.2 million to load LPG in Ras Laffan, Qatar.
South Korean LPG importer SK Gas also fixed Aurora Leo for USD119/tonne for a Gulf-Asia Pacific trip while Turkish importer Bayegan took Helios LPG-operated Concorde for a Baltic-linked rate.
Pricing agency Oil Price Information Services (OPIS) said demand for LPG cracking over July is slated to remain firm as LPG is now cheaper than naphtha.
OPIS assessed the mean price for naphtha (based on delivery into Japan) at USD567/tonne, while that of LPG on the same basis is about USD511.75/tonne.
OPIS said, “Sources reckoned that more petrochemical refiners will emerge in the market.”
Continuing congestion in Indian ports only mean that tonnage will remain tight, lending support to the freight market.
OPIS, however, cautioned that the steep freight rates are deterring Chinese, South Korean, and Japanese traders from moving cargoes, resulting in some traders reletting chartered-in or owned tonnage into the market.