VLGC rates have been tipped to hold at elevated levels next month in western markets.

Spot earnings may have dropped 3% on Thursday to $125,700 per day out of the Middle East Gulf, but US Gulf to Japan numbers were steady at $118,300 per day.

Freight rates east of Suez look likely to have peaked after having traded at a premium, which historically does not last long, Fearnley Securities said.

Brokers tally 13 spot deals done for December, with the monthly average being 30 in the last four months, with the freight balance more equal into the second half of next month as the pace of fixing slows.

“However, the rates out of the West do not look ready to follow suit yet as the shipping market remains super-tight with only five to six available positions in January, and half of them could end up in the Middle East Gulf,” Fearnley Securities analysts Oystein Vaagen and Ulrik Mannhart said.

Waiting time in the Panama Canal remains high at 23 days northbound and 19 days southbound.

The investment bank argues the larger question remains what will happen to freight markets in 2023, with 47 new VLGCs — 13% of the fleet — due to hit the water.

Industry estimates suggest only 2.5% to 3% demand growth.

“While we expect rates to come down, we believe 2023 should be a relatively strong year for VLGCs as price arbitrages look to remain strong,” Vaagen and Mannhart said.

US exports are estimated to grow 10%.

Charter rates have risen

Oslo-listed owner Avance Gas believes this will tie up between 12 and 15 VLGCs, or 33% of the 2023 orderbook.

The company said earlier this month it had fixed out its non-scrubber, 83,000-cbm Pampero (built 2015) to Hindustan Petroleum in India for a year to replace a ship it had sold.

The existing deal was done at $30,000 per day.

Avance Gas executive chairman Oystein Kalleklev told a conference call that the new agreement has been “reported” to be in the mid-$30,000s, but did not narrow it down further.

“So, we fixed this a while back before the market took off,” he said.