Executives at New York-listed Dorian LPG are interested in growing their fleet, but the current asking price on VLGCs will make such transactions difficult, according to a JP Morgan report.
Analyst Noah Parquette says the remarks were delivered by US chief executive John Lycouris and chief financial officer Ted Young at JP Morgan's Aviation, Transportation, and Industrials Conference.
While newbuilding orders are off the table, the executives "mentioned an interest in growing the business, either through individual secondhand purchases or company acquisitions," Parquette said.
But "management commented that there has been almost no transactions in recent months, with a wide bid-ask spread."
A VLGC less than five years old is currently worth between $61m and $66m, according to Seasure Shipbroking's Vesselsvalue platform.
Ballast water regulations, which come into force this year, could also provide a temporary boost to the VLGC market as drydockings tie up capacity. Dorian executives estimates that between 65 and 71 ships, comprising 27% of the world fleet, will need to install ballast treatment systems from September 2017 through the end of 2018.
This year should also see growth in LPG imports by major customers. Dorian expects Chinese demand, driven by petrochemical and retail markets, to rise 20% to 18 million metric tonnes this year, while India could see demand rise 25% to 12.5 million metric tonnes on the back of increasing retail use.
