BW LPG has posted its strongest quarterly performance on record in the first three months of 2023 with the prospect of more to come.
The Singapore-based LPG carrier specialist said its fleet achieved its highest-ever daily time charter equivalent (TCE) of $58,700 per calendar day.
As a result, TCE income for BW LPG’s shipping segment increased to $200.3m in the first quarter against $130.7m a year ago, mainly due to higher LPG spot rates and higher fleet utilisation.
“Spot rates for the quarter found support in strong US exports and urgent demand from the Far East, one of the most dramatic drops in spot rates was recorded in March, and earnings have since climbed again,” BW LPG said.
“North America LPG exports in the first quarter increased significantly by 18% to 14.7m tonnes. More than 90% of the growth was driven by exports via VLGCs.
“China LPG imports in the first quarter increased by 13% to 6m tonnes with the sudden increase in Chinese demand after the government lifted the Covid-19 restrictions,” the shipowner added.
The Oslo-listed shipowner added that its India subsidiary continues to contribute stable TCE income of $24m for the first quarter mainly from fixed-rate time charters.
Meanwhile, Indian LPG imports also increased significantly by 27% to 5.1m tonnes over the same period. The strong start to the year was just below the historic high record in the fourth quarter of 2022.
BW LPG’s trading division concluded its first full quarter of operations, delivering a net profit after tax of $3m for the quarter and trading over 1m tonnes of LPG.
“For 2023, the VLGC market looks strong but volatile,” BW LPG said in its quarterly results statement released Tuesday.
Key underlying drivers are said to include solid US and steady Middle Eastern export growth and improved economics for Propane Dehydrogenation (PDH) plants in China.
In addition, a heavy dry-dock schedule and the Panama Canal transit congestion are creating shipping inefficiencies, while the recently announced export capacity additions in the US adds confidence for the longer term, the shipowner said.
Looking ahead, BW LPG has fixed 90% of its available fleet days in the second quarter at an average rate of $50,000 per day.
BW LPG declared a first quarter cash dividend of $0.95 per share, representing a pay-out ratio of 100% of NPAT and an annualised dividend yield of 43%
On Monday, Clarksons Securities said spot rates for large gas carriers were outperforming market forecasts at just under $80,000 per day, up 7% from last week and 33% over the previous month.
The Norway-based investment bank said average VLGC earnings may peak at around $75,000 in May and June before falling to $65,000 in the third and fourth quarters according to the forward freight agreement (FFA) market.
