After reaching a 2015 high of USD137.938 per tonne on 15 July, rates to ship LPG on very large gas carriers (VLGCs) have since been falling.
On 21 July, rates averaged USD129.375 per tonne, working out to USD132,147 in daily earnings at current bunker prices in Fujairah.
An Oslo-based broker told IHS Maritime, “Cargo traders have been choosing to cancel cargoes in the US Gulf, opting instead to relet their ships for a profit. Heading into next week, the market should become quiet as everyone waits for Saudi Aramco’s announcement of August contract prices.”
The LPG trading market has become jittery amid falling LPG prices.
Oil Price Information Service (OPIS) said that cost-and-freight LPG prices (basis delivery into Japan) averaged USD466 per tonne on 21 July, a USD11 drop from 20 July.
Mont Belvieu (pricing standard for US LPG) prices have also fallen, averaging USD600.50 per tonne on 21 July, a USD5.25 drop from 20 July.
“August demand from the petrochemical front continued to look weak as the spread between LPG and naphtha remained narrow. With the discount between LPG and naphtha prices at between USD40-USD50 per tonne, interests from buyers are not strong,” said OPIS.
Traders told IHS Maritime that LPG prices must be at least 10% below those of naphtha to persuade petrochemical producers to switch feedstocks.
Spot vessel rates for Algeria, West Africa, and Houston to Japan declined to around USD215.50 per tonne, USD220.50 per tonne, and USD320.50 per tonne respectively, compared with USD221.50 per tonne, USD227 per tonne, and USD329 per tonne on 14 July.