Avance Gas boss Oystein Kalleklev is leaning towards maintaining a dominant position in the spot market, rather than fixing vessels on term deals.
The chief executive was asked on a conference call with analysts whether expected average rates of $50,000 per day for the second quarter would tempt the VLGC company to charter out carriers longer-term.
Kalleklev said: "We look at the market now and you can lock in $80,000, $90,000, even $100,000 on a spot voyage, depending on the route and the length. So it's really something you have to calculate."
“Let’s say somebody’s asking if you will fix a ship on time charter for $52,000 per day for 12 months, you really need to calculate, ok, we can do one long voyage here at $80,000 and it takes 80 days or so, what is the implied value of the back end of the curve?” he added.
Kalleklev said he could not give a definitive answer, but would continue to monitor the market.
"We're quite comfortable with having 40% coverage for the second half of the year," he told the call. "Of course we are fully open for next year."
And the CEO said he would actually prefer having more spot ships available "because we are really one of the very big players."
"We get a dominant position. If you have a dominant position, it's easier to position your vessels or swap them," Kalleklev said.
He explained that there are synergies to be gained from being big in the spot market, and also in terms of the ranking for transits through the Panama Canal.
"So we like the spot market and we will probably grow our presence in the spot market. If we fix all the ships out on time charter we become lesser in size," the CEO added.
Kalleklev said Avance Gas is currently chasing loadings in US middle of July, and then return trips, so bookings are running into the middle of August.
“We’re building that backlog every week now,” he added.
The company's average time charter equivalent (TCE) rate on a load-to-discharge basis was $58,379 per day in the first quarter, up from $46,478 in the fourth quarter of 2022.
This was slightly ahead of its own guidance of $58,000 per day.
