VLGC rates slide further on slow trade

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06 April 2015

A slowdown in LPG trade has caused very large gas carrier (VLGC) rates to slide again.

On 2 April, the Baltic Exchange assessed the benchmark Ras Tanura-Chiba rate at USD79.25/tonne, working out to daily earnings of USD74,280 at current bunker prices in Fujairah.

Indian Oil Corporation last week fixed G. Symphony and Aquamarine Progress for USD2.5 million and USD3.3 million. South Korean LPG importer E1 booked Aurora Leo, but the rate was not revealed.

Brokers and LPG traders told IHS Maritime that the Easter weekend and the Tomb-sweeping holiday in China on 6 April have resulted in limited trading.

A Japanese trader said, "Now that winter is over, demand isn't that high. We think there is enough LPG in the market and prices should fall."

Pricing agency Oil Price Information Service (OPIS) also noted that naphtha is now more attractive as a feedstock since it is cheaper.

Spot LPG price on a cost-and-freight basis for delivery into Japan was assessed by OPIS at USD525/tonne, up USD2.25 from 1 April.

Integrated shipping services provider Clarksons is, however, optimistic that rates will go up again, citing the falling availability of ships in the Gulf.

Clarksons remarked, "A number of enquiries are attracting vessels positioned East to ballast into the Atlantic and these combined effects are starting to tighten the balance of vessels which can load in the Gulf.

"In the West, the story is much the same as last week with a series of enquiries generating demand. Owner's freight ideas have moderated slightly to the point where the West-East differential is closer to parity, but more importantly the rate levels are starting to look viable from a trading perspective and we anticipate seeing a resumption of fixtures concluded from US Gulf to European and Asian destinations, further tightening the shipping balance."