Norway’s Avance Gas is optimistic of further gains in VLGC markets that are already the strongest for seven years.
The John Fredriksen-controlled owner logged net profit of $11.6m in the third quarter, up from $4.2m a year ago.
Revenue grew to $55m from $47m due to an average time charter equivalent rate of $32,954 per day.
This was ahead of guidance at $32,000, while daily operating expenses were $8,200.
For the fourth quarter, the TCE rate is estimated at between $45,000 and $50,000 per day. The company has 93% of vessel days fixed.
Spot rates are now above $130,000 from the Middle East Gulf.
Executive chairman Oystein Kalleklev admitted third-quarter rates were “a bit on the soft side” compared with the first two quarters.
“We are, however, very well positioned for fourth quarter,” he added.
“With strong volume growth and increased tonne-time, we today see the strongest LPG freight market since 2015.”
VLGC trade continues to grow at a robust pace, the company noted.
Total volumes exported on VLGCs in the third quarter were 8% higher than a year ago and total exports in the first nine months stood at 66.7m tonnes, up 10% on 2021.
US exports have risen 4%, or 1.1m tons, while the Middle East is up 18% year on year, or 4.3m tons, driven in large part by resuming oil output and related production of natural gas liquids.
The Energy Information Administration remains positive on US exports for 2023, estimating a 10% export growth despite only 3% production growth.
“On our estimates, this should be able to consume about 12 to 15 VLGCs, or up to one-third of the orderbook for 2023,” Avance Gas said.
Room for improvement
“The 2m barrel per day Opec+ crude output cut is likely to reverse some of the LPG growth seen so far in 2023, leaving us cautious on our view on Middle East export growth in 2023.”
But the owner believes tonne-miles have room to improve.
“We calculate average sailing distance for US LPG exports on VLGCs to be down 5% year on year so far in 2022,” it said.
“Europe has imported nearly 20% of US LPG exports in the first nine months of 2022, up from 10% in the same period last year. If this was to reverse, that more US LPG was to be sold to Asia, it would have a positive effect on sailing distance, and thus tonne-mile demand.”