Navigator newbuild fixed

Wilbur Ross backed Navigator Holdings has secured a long term contract for one of its four ethylene/ethane carriers amid suggestions orders for very large ethane carriers (VLECs) could follow.

Borealis, the polyolefins, base chemicals and fertilizer company, has hired the 35,000 cbm vessel on a 10-year deal, the owner said.

No rate was revealed for the contract, which will begin when the ship is delivered from Jiangnan Shipyard in 2016.

“This charter reflects the initial demand to transport ethane in such large quantities, facilitating the diversification by international petrochemical companies of their feedstock supplies with low cost US ethane,” Navigator said.

The vessel will transport ethane from the Marcus Hook terminal operated by Sunoco Logistics to Borealis' cracker in Stenungsund, Sweden, Navigator added.

“The rate implied from a mid-teens type unlevered return is in-line with our prior expectation,” said Doug Mavrinac of Jefferies.

In a research report Mavrinac adds with the first contract in place deals for the remaining three vessels should be secured by the end of the year.

He added: “It is quite possible that the company could order very large ethane carriers (VLECs) with charters attached to Far Eastern petrochemical producers in the not too distant future.”

Navigator revealed the charter just a day after disclosing a stronger than expected second quarter profit.

The Wilbur Ross-led company reported net income for the quarter of $19.7m, a full 71.3% more than that of second quarter of 2013.

Ben Nolan of Stifel says earnings per share of $0.35 were two cents ahead of the Wall Street consensus.