John Fredriksen-controlled Avance Gas is expecting continued volatility in VLGC markets after it made it back into the black for the first quarter.
The Oslo-listed shipowner said net profit was $15.1m to 31 March, compared to a loss of $15.2m in the same period of 2019.
Revenue from its 14 VLGCs rose to $68m from $28m year-on-year.
Fearnley Securities said Ebitda of $32m was in line with its estimates, but a little below consensus of $35m.
The company's average time charter equivalent rate was $44,990 per day, while daily operating expenses were $8,650 per day, against $7,983 per day a year ago.
Spot rates have now plunged 63% from April, however, to around $20,000 per day as arbitrage opportunities dry up.
"The Covid-19 virus outbreak has had significant impact on global trade and in the capital markets," the company said.
"For the VLGC market, we have in the first quarter seen temporary reductions in LPG demand in Asia and Europe, while travel bans, quarantines and lock downs has led to delays at shipyards and lower global fleet efficiency."
Lower capacity but lower returns
This has led to lower fleet capacity, which has supported the freight market, but also to lower returns for those impacted by the delays, Avance Gas said.
The company called LPG product pricing "challenging" and also cited production cuts in the Middle East as a reason for weaker markets.
"Volatility has returned as LPG trading fundamentals have become less attractive," Avance Gas added.
Middle East VLGC exports totalled 7.6m tonnes in the period, down from 7.7m tonnes in the final three months of 2019.
The increase in oil production impacted spot market activity in the region in March and April, but this has since fallen back due to output cuts, the company said.
There is a global orderbook of 33 VLGCs, about 11% of the fleet. Of these, 10 are due this year.
"Shipbrokers are expecting slippage in the orderbook due to delays in delivery of key ship components to shipyards following the Covid-19 outbreak," Avance Gas said.
