- Low activity, closed Western arbitrage dampen rates to 7-month low.
- Shipowners need to accept bearish market and get vessels going, or wait for better times.
- Drydocking remains in full force, recovery in trade activity will drive freight back up.
A recent news article published in the Platts written by Ramthan Hussain reveals that VLGC rates in steepest freefall in two decades, hopes on return of Chinese LPG trade.
VLGC rates extended
Very Large Gas Carrier, or VLGC, rates extended their sharpest freefall in around two decades to seven-month lows at $37/mt, S&P Global Platts data showed, with more short-term downside seen, on low shipping activity and a closed Western arbitrage, shipping sources said Feb. 16.
But some recovery may be on the horizon with China’s return from long holidays and the continuing cycle of vessels in dry docks for repairs, sources added.
Middle East to Japan freight rates
Middle East to Japan freight rates have been plunging since touching more than five-year highs of $119/mt over Jan. 13-14, as the availability of trader vessel relets also piled on the pressure.
The previous steep uninterrupted plunge in Middle East-Japan rates was between July 16, 2015 at $136/mt and Sep. 1, 2015 at $65.5/mt, Platts data showed.
VLGC rates touched near two-year lows
VLGC rates touched near two-year lows at $23.5/mt on June 23, 2020, Platts data showed.
In contrast, rates recorded an interrupted rally over March 3, 2014 at $38/mt to $133.5/mt on Apr. 28, 2014.
Freight then surged to records of $144.5/mt on July 23, 2014, driven by the rush of US LPG shipments to global markets, at the onset of the shale boom and severe shortage of VLGCs.
A total of 301 VLGCs are on water
Since then, a total of 301 VLGCs are on water, with two on the orderbook and 19 delivered in 2020, including two in Q3, BW LPG said in its quarterly report. For 2021, 19 VLGCs are on the orderbook, with another 11 in 2022 and five in 2023.
Shipowners’ consent
“Shipowners will need to accept the market and get their vessels going, or wait for better times. If such is the case, more vessels will pile up in the US and the East, and rates will take longer to recover,” a shipping source said.
“Drydocking is still in full force this year and I don’t think it will take too much activity in the market before the rates go back up to healthy levels.”
Houston-Japan rates fell
Houston-Japan rates fell to $80/mt between Feb. 4 and Feb. 8, the lowest since July 23, 2020, before recovering to $83/mt over Feb. 9 -12, Platts data showed.
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Source : Platts
