VLGC spot rates have roared past $100,000 per day in hot and volatile freight markets.
The Baltic Exchange has assessed Middle East Gulf to Asia numbers at $101,900 per day, up 2% from the previous day and a gain of 86% in a month.
The run from Houston in the US to Chiba in Japan through the Panama Canal was flat at $83,000 per day, but still 36% higher than at this point in May.
Fearnley Securities analysts led by Oystein Vaagen said: “In Asia, the market remains hot with a steady pace of fixing.”
As the focus turns towards the end of June, the tight position list could potentially open up, but for now the first firm position is from 26 June onwards, they added.
West of Suez, freight earnings have not increased at the same pace as in Asia.
Only a few ships have been booked on subjects this week in the US Gulf and West Africa, the investment bank noted.
Fearnley brokers reported a handful of VLGCs available for the first half of July, with some owners looking into the second half of the month already.
Clarksons Securities had words of warning over the market volatility, however.
Outperforming the wider market
Listed LPG carrier owners outperformed wider stock market trends over the last week, with BW LPG up an “impressive” 18% following strong profit reported for the first quarter and a dividend equal to 100% of its earnings per share.
“Despite the strength of VLGC spot rates, we expect more downside risk than additional upside potential,” the investment bank said.
Analysts Frode Morkedal and Even Kolsgaard added: “Contrary to popular belief, the expected influx of new vessels from yards is still ahead of us, as evidenced by VLGC net fleet growth of approximately 6% in the first quarter of 2023.”
They predicted that this will gradually increase to about 15% year on year by the end of 2023.
“Despite BW LPG’s appealing valuation, we remain wary of the VLGC sector due to its sensitivity to spot rate fluctuations,” they said.
