John Fredriksen's Avance Gas expects the VLGC rate rally to continue as delays worldwide tie up shipping capacity.
The Oslo-listed company said that with continued strong Asian retail demand and improving oil prices, the large LPG carrier sector rebounded more quickly than expected after the slump earlier this year and has remained strong throughout the autumn.
The Baltic Exchange's VLGC index stood at $69.43 per tonne on Tuesday, or a rate of $58,580 per day, against around $10,000 per day in June.
Avance said: "We continue to see inefficiencies driving the freight market with turn-time in China, slow discharge in India, coupled with delays in Panama, creating a lasting positive sentiment leading in to the fourth quarter."
Reduced delivery impact
The global fleet numbers 304 VLGCs, with 18 of those operating as storage vessels, the shipowner added.
The orderbook represents 12.5% of the operational fleet, with one newbuilding due for delivery in the fourth quarter.
"The effect of the orderbook will be partly mitigated by circa 20%-25% of the fleet due for special surveys [between] 2020 [and] 2022, suggesting a positive outlook for the next few years," the company said.
Avance Gas achieved an average time charter equivalent rate of $23,283 per day in the third quarter, compared with $28,453 per day in the second quarter.
But it was hit by a ballast cost of $4,000 per day, which it expects to be recovered over the rest of 2020.
Net earnings were $2.3m for the period ending 30 September, down from $24.7m in the same period of 2019.
This is because revenue crashed back to $36m from $71m, partly due to dry-dockings.
An earnings miss
Norwegian investment bank Fearnley Securities said the result was well below expectations on soft time charter earnings and fewer sailing days.
The consensus was for Ebitda to come in at $23m, but it was $12m.
For the fourth quarter, Avance is estimating a contracted TCE rate of $40,000 per day for 90% of vessel days.
The company said it had been a strong quarter for LPG freight despite fluctuations in export volumes from US basins.
US Gulf and East Coast VLGC exports hit 8.6m tonnes, compared with 9m tonnes in the second quarter.
There were 58 cargoes in September, but preliminary numbers show high activity into the final three months, with 76 cargoes recorded in October.
