Resurgent VLGC rates could pass $100,000 per day this summer, analysts at DNB Markets believe.
Its bullish read sent shares in Oslo’s two listed VLGC owners skywards on Thursday.
DNB Markets analysts led by Nicolay Dyvik have been positive on a VLGC market recovery and last month forecast rates to peak at $45,000 per day in the 2019 high season.
“We now believe they could approach six figures this summer,” the analysts wrote in a report today.
Both full utilization of US export terminal capacity and a potentially widening the US–Asia propane arbitrage are fueling the mood.
“We note US–Asia propane arbitrage is already at a three -year high," Dyvik and his colleagues said.
" The last time US LPG exports fully utilised terminal capacity was in 2014–2015, and subsequently the arbitrage increased and VLGC rates went to six figures.”
BW LPG stock jumped almost 7% to NOK 34.06 each this morning, and is trading up over 30% this year.
Avanace Gas climbed by almost 3% to NOK 19.04 each at the time of writing on Thursday and is now up almost 55% in the year to date.
DNB Markets is forecasting VLGC rates of $24,000 per day on average this year, rising to $28,000 per day in 2020.
“The LPG sector is our favourite, along with tankers, as we see a strong market in the next 24 months,” the analysts said.
