VLGC rates on the rise

Rates for very large gas carriers (VLGCs) are on the rise and many believe the segment will continue to gain momentum in the weeks to come.
Dorian LPG: The world's second largest VLGC owner.

The forecast bodes well for the likes of Dorian LPG, the world's second largest VLGC owner.

In a note to clients DNB Markets pointed out that levels have topped $93,000 per day on average, which represents a gain of 63% when compared to a trough that formed in May.

The European investment bank’s shipping research team said VLGCs are entering “high season”, which is why its forecasters expect to see day rates hit $123,000 or even higher.

“We highlight that there is still upside potential in rates to $123,000/day if the entire arbitrage between US FOB prices (estimated $594 per tonne) of propane and Asia CIF prices ($895 per tonne) are captured by the shipowner,” they wrote, adding:

“If we in addition assume that the pre-paid terminal fees are in potential earnings for VLGC owners, we see the theoretical ceiling in rates to be $155,000 per day.”

On Friday an equity analyst at Global Hunter Securities, Omar Nokta, said day rates for tonnage trading between the Arabian Gulf and Far East have hit $96,200, which represents a spike of more than 10% week-on-week.

Related

User