John Fredriksen-controlled VLGC company Avance Gas is expecting a return of Chinese demand as the country recovers from Covid-19.
In its annual report, chairman Marius Hermansen said the freight market has remained resilient since year-end, during what is normally a seasonally weaker period.
Solid US LPG production and high inventories had contributed to steady exports in 2019.
Together with disruptions resulting from the IMO 2020 fuel regulations, the strong freight market had continued, he added.
"But since year-end, we have seen the global outbreak of the Covid-19 virus," the chairman said. "It is too early to say how this will impact the LPG trading and VLGC demand in the long term.
"However, it is expected that the reduced demand from China's propane dehydrogenation [PDH] plants will be restored, supported by a reduction of US tariffs on Chinese LPG importers."
Oil price conundrum
The fall in the oil price after Opec ramped up production was expected to lead to increased LPG production and exports from this region, said Hermansen, who is also head of sale and purchase and newbuildings for Fredriksen's Seatankers group.
However, lower oil prices may also lead to reduced oil and gas production in the US, which in turn should lead to lower LPG production and exports.
"The combination of the above effects is dependent on the resilience of US oil and gas production and for which duration we will see these oil price levels," he said.
"We expect the Iran volumes to remain low due to the ongoing sanctions. Exports from Australia, West Africa, Canada and other areas are expected to remain steady."
US LPG inventories were still at record levels and the latest forecasts suggest a continued robust production and export activity in the US, he said.
The incremental growth in demand is expected to continue to come from Asia and the share of US exports to Asia will remain high, he added.
Boss departs
Chief executive Ulrik Andersen left the company to become the boss at Fredriksen bulker company Golden Ocean this week.
Avance Gas said its key focus will remain cost efficiency and preserving its liquidity position and balance sheet.
"The long-term impact on the global economy and the transportation of LPG is uncertain at the date of this report," it said.
Travel restrictions and quarantine have increased the complexity of planning for drydocking and its scrubber retrofit programme, it added.
