Rates for very large gas carriers (VLGC) could remain near seven-year lows as an ongoing supply glut and a lack of LPG trading opportunities persist into next year, according to consultancy Drewry. It adds that VLGC scrapping will remain rare due to the young age of the fleet.
Researcher Shresth Sharma says 64 additional ships are due for delivery next year, adding up to fleet growth of 12% in 2017.
Two vessels have been scrapped in recent months, the first such demolitions in this segment since 2011. JX Ocean sent the 78,500-cbm Nichiyuh Maru (built 1989) for demolition in India in October. The Naftomar-owned 82,500-cbm Gaz Fountain (built 1986) was also sent to scrap this year.
Sharma says there is little scope for demolitions given the young age-profile of the fleet. There are just four ships in the current VLGC fleet over 30 years of age, and a further 13 of between 25 and 30 years.
“Although the average scrapping age could fall sharply in a weak market, we do not expect this to happen in the current VLGC market as there are no signs of panic demolitions yet," Sharma said. "Therefore, we believe excess vessel supply is here to stay, which will keep rates under pressure in the next year too.”
The Baltic Exchange's LPG freight index was last marked at $24.88 per ton, a level last seen in August 2009.
