There is no surer sign of a robust shipping market than shipowners squeezing fat profits out of vessels that would normally be expected to be heading towards retirement.
LPG carriers are providing such an example, with Greece’s Naftomar doubling its money on a 26-year-old ship.
In June 2018, when LPG carriers were earning some of the lowest earnings in recent history, the Athens-based company spent about $16m to buy the 79,500-cbm Fountain River (built 1997) before renaming it Gaz Liberty.
Fast-forward to April 2023 and the situation looks completely different.
Brokers in the US and London have reported that Naftomar sold the ship last month to Middle Eastern interests for more than $30m. Some even said the figure was $32.5m, which would be more than double its acquisition price five years ago.
Managers at Naftomar confirmed that it has agreed to sell the vessel. However, they declined to comment on the price, citing confidentiality reasons.
Market observers have little doubt that brokers have got the price right.
“At that level, it must have been hard to say ‘no’ to selling the vessel,” one source commented.
‘Phenomenal run’
Analysts such as Jefferies’ Omar Nokta have been singing the praises of LPG shipping recently, expressing surprise that investors have not piled into the trade in larger numbers.
“LPG has been on a phenomenal run,” he commented late in April, as TradeWinds reported.
According to Nokta, the market sees VLGCs earning about $70,000 per day — twice the level in April last year.
Another factor playing into the market’s hands is the modest newbuilding orderbook.
“There’s no big orderbook, unlike 10 years ago, when we saw it build with heavy deliveries for three or four years straight,” Nokta said.
Busy sale-and-purchase activity extends to younger and smaller ships as well. TradeWinds has already reported about Sinogas Management’s 80,200-cbm Gas Beryl (built 2010) finding a new owner for about $59m.
The buyer was initially believed to be Ravi Mehrotra’s Foresight Group. This information, however, turned out to have been incorrect and TradeWinds understands that a different and still undisclosed player agreed to buy the vessel.
In more recent news, Clarksons reported Indonesia’s Samudera Shipping Line as picking up a 7,500-cbm newbuilding in a $26m resale deal.
Hull No 729 is under construction at Japan’s Sasaki Zosen on behalf of Global One Energy, a Switzerland-based trading company, and is scheduled for delivery this year.
Samudera issued a profit warning in recent days over a contraction in revenue. However, it pointed out that its performance in the first quarter still exceeded that of the same period last year.
Other companies are developing an appetite for LPG as well.
Castor Maritime spin-off Toro Corp broke into the sector by acquiring four small LPG carriers. Purus Marine, an energy transition player, confirmed a $276m splurge on a quartet of midsize newbuildings.
