Oslo-listed Avance Gas is expecting earnings to rise again in strong markets dominated by the “buzzword” of the Panama Canal.
The John Fredriksen-controlled company said congestion at the waterway is pushing spot rates to record levels.
Avance Gas’ average time charter equivalent rate on a discharge-to-discharge basis was $55,300 per day in the third quarter, up from $50,800 in the second three months.
The figure was impacted by forward freight agreement losses of $10.6m, or $8,300 per day, for the fleet to 30 September.
Daily operating expenses were stable at $8,070 per day.
“For the fourth quarter of 2023, we estimate [the] TCE rate… to be $70,000 to $75,000 per day on a discharge-to-discharge basis,” Avance Gas said.
Average spot rates are expected to be in the $90,000 to $100,000 range.
Net profit jumped to $30.1m compared to $11.6m a year ago. Revenue grew to $79.5m from $55.4m.
Chief executive Oystein Kalleklev said: “The LPG freight market continues to rip with the best market conditions since 2015.”
“And the best is yet to come as we do expect that Q4 will be by far our best quarter this year. From September onwards, the freight market has been exceptionally strong, fuelled by Panama congestion, strong US export growth and a very high arbitrage between LPG prices in the US compared to the Far East, supporting freight levels,” he added.
Fixtures stretch out
VLGCs have been avoiding the Panama Canal, taking longer routes to escape delays there.
The CEO said: “Given the extended ballast legs from Asia to the US Gulf Coast via Suez, we are now booking voyages with loading at the end of the year and are, therefore, also securing healthy earnings well into the first quarter of next year.”
Avance Gas is paying a dividend of $0.50 per share, or $38.3m for the third quarter.
The owner revealed it had received credit approval for the refinancing of the 84,000-dwt Pampero (built 2015) with a $43m five-year bank facility at attractive financing terms.
“The financing will significantly improve the current financing of the vessel and bears a margin of 1.9%,” Avance Gas said.
