Avance Gas is bullish on VLGC rates recovering this year and next year.
“We are structurally bull on the market 2024 and 2025,” said chief executive Oystein Kalleklev in the fourth-quarter report conference call.
The company has increased its spot exposure despite a slump in the past few weeks.
It has one ship on fixed hire rate, one on variable hire and one-and-a half hedged by forward freight agreements (FFAs) in the first quarter.
The company recently sold two ships on time charter and has not replaced that contract coverage.
“We have a constructive view on the market and want to capture that upside by having ships in the spot market,” Kalleklev said.
Avance Gas’ fleet consists of 12 vessels and four newbuildings under construction.
VLGC rates have collapsed to less than $10,000 per day this year after reaching records of $170,000 per day in 2023.
“The structural balance of the market looks better this year and certainly even more so next year,” Kalleklev said.
Fewer newbuildings will come to the market in 2024 and 2025 compared with last year, according to the CEO.
“The FFA curve looks fairly reasonable. It’s reasonable to think that the market will continue to tighten a bit.”
The company does not plan to hedge on FFAs on these rates.
“We are probably a bit more bullish on the market than the FFA curves for ’25, given how few ships there are for delivery in ’25,” he said.
Avance Gas shares rose as much as 10% on the Oslo Stock Exchange on Wednesday after a “blockbusting” fourth quarter.
DNB said the results “were in line” with expectations and guidance for the first quarter was “constructive” and “supportive of consensus’ expectations”.
The firm is about 70% booked for the first quarter with an average time charter equivalent of about $70,000 per day on a discharge-to-discharge basis.
ABG Sundal Collier called the guidance “not as bad as feared” and “better than the current market”.
