After reaching over USD136/tonne on 3 July, rates to haul LPG on very large gas carriers (VLGCs) have been falling since 6 July.
As at 9 July, the Baltic Exchange assessed the rates on the benchmark Gulf-Asia Pacific route at USD133.313/tonne.
Despite lower freight rates, daily earnings are now higher than on 3 July, at USD137,000, because bunker prices in Fujairah have fallen to nearly USD300/tonne.
Ship brokers told IHS Maritime that the drop in prices of LPG in the Gulf have resulted in losses for traders who have thus sought to bring freight rates down.
On 9 July, average LPG prices, based on delivery into Japan, fell to USD457/tonne on 9 July from USD474.50/tonne on 3 July.
As an indication, a couple of ships were fixed at rates lower than the Baltic average on 9 July.
Benny Princess was fixed to Kuwait Petroleum Corporation at USD130/tonne for a Mina Al-Ahmadi-Asia Pacific trip while Aurora Capricorn was fixed at USD128/tonne to Glencore.
Indian demand continues to support the market, with Hindustan Petroleum Corporation fixing British Commerce at USD5.725 million and Passat for USD5.7 million.
Pricing agency Oil Price Information Service (OPIS) said that discussions have turned to free on board (FOB) shipments, rather than cost and freight (CFR) shipments, as Middle Eastern producers grapple with excess LPG cargoes.
Related news:VLGC rates near $130/tonne
Cargo buyers are responsible for freight costs for FOB shipments while this obligation lies with the cargo sellers for CFR shipments.
OPIS said that South Korean and Japanese cargo buyers have been offering their cargoes for sale, indicating weak demand as summer kicks in.
At least two cargoes were sold on a netback basis, meaning the price of the goods is based on all the revenues from the products, excluding the costs of getting the cargoes to the market.
OPIS said, “The supply glut over August and the steep spot chartering rates were perceived to have prompted the producer to sell on netback basis.”
Qatari supplier Tasweeq may sell up to five spot parcels over August as the added supply from the Ras Laffan refinery and its gas fields had allowed the state-owned company to increase its spot supply recently.