Key LPG Persian Gulf to Japan tanker freight plummets to 8-month low

aurora lpg

Ample vessel supply and tepid spot chartering for Middle East loading LPG cargoes has caused the key Persian Gulf to Japan freight rate to slump 30% since the start of January to an eight-month low, market participants said.

“Lots of ships around, prompt vessels as well as traders re-let ships at low levels are pushing the market down,” an LPG shipbroker said.

Many traders who were using vessels from their own fleets to move cargoes, and re-letting some of those vessels in the spot market, ramping up the price competition among LPG tankers in the region, sources said.

The Persian Gulf to Japan freight has fallen to $25/mt Friday from $35.50/mt on January 2. The rate was last assessed at this level on May 15, 2018, S&P Global Platts data showed.

In fixtures heard, Oriental Energy chartered the Gas Libra for a Ras Tanura-East voyage, loading February 2, at $24.50/mt. Market sources said the vessel was prompt in the Middle East and marked a repeatable level as $25/mt, as also heard was Total fixing the Nadeshiko Gas for a Darwin-East voyage, loading February 7-8, at $25.50/mt basis a Ras Tanura-Chiba route.

Sources said they thought bearish sentiment was here to stay because of long vessel supply as well thin spot trading of Middle Eastern cargoes to Asia, with movements largely restricted to term shipments.

Trade sources said such low freight rates and limited spot cargo trading also helped support high premiums for FOB Middle East LPG cargoes in double digits over the past week.

VLGC rates in Asia have been volatile in recent months. In late October/early November freight whipsawed within two weeks to $40/mt the lowest in a month and a half at the time from a 32-month peak of $48/mt around mid-October, as busy Middle Eastern cargo activity was met by traders using owned vessels to lift term cargoes and chartered vessels being put on relets, shipping sources said.

Industry sources said the supply of VLGCs was balanced in 2018 with seven vessels scrapped and around nine new deliveries, while for 2019, the number of vessels due to be delivered is about 19.

Source: Platts



Comments are closed.