VLGC rates have continued to be bullish over the past week as activity out of the US Gulf gains momentum.
VLGC earnings are currently at $43,400 per day, reflecting a 5% increase day on day and a 60% rise week on week, according to Clarksons.
Similarly, Jefferies has standard VLGC rates at $44,000 per day, up 5.8% on the previous day and from $29,400 per day a week ago.
“Following a lacklustre start to August, the VLGC market saw a flurry of activity in both the East and West towards the end of the week,” Clarksons indicated.
In the West, the combination of a flurry of activity, the clearing out of the overhanging length of August tonnage ex-USG and a widening arbitrage, saw rates on the Houston-China route rise from the low $90s per tonne to just under $110 per tonne by the end of last Friday, Clarksons explained, as owners are now looking to push levels further.
The Baltic LPG3 route from Houston to Japan surged to nearly $110 per tonne last Friday and is currently at $115 or about $41,800 per day, up from $90.17 a week ago.
“With free on board cargo owners having the advantage in recent weeks, owners saw the opportunity to squeeze charterers on rates and push the fixing window as far as the last week of September,” Clarksons said.
Despite the vast amount of fixing, a number of vessels remain open for September and rates are expected to remain strong for the foreseeable with more fixing activity expected for the second half of September, Clarksons said.
“As we approach the seasonally strongest period for the market, rates are likely to continue climbing. The FFA market anticipates rates averaging in the mid-$50,000s per day during the fourth quarter,” it added.
Jefferies concurred that VLGC spot rates had begun to show improving signs, as disruptions in the US Gulf, following last month’s storms, are now dissipating.
“Shipbrokers note more activity out of the region is supporting rates higher, especially with continued-wide LPG pricing between the US and global markets,” Jefferies noted.
Freight rates on the USG-Asia route have risen from $90 per tonne last week to $96 per tonne, taking time-charter equivalent rates globally on average from $25,000 per day to nearly $30,000 per day, it added.
Meanwhile, in the Middle East, a number of fixtures out of Yanbu also helped to support the market, Clarksons indicated.
It said that with Saudi acceptances now announced, bullish sentiment and continued activity is expected to continue there also.
On the Middle East-to-China trade lane, dubbed the LPG1, spot rates rose to $55.50 per tonne on last Friday and are currently knocking on $60 per tonne, a surge from about $41.83 a week ago.
Last week, BW also announced acquiring Avance Gas’ fleet of 12 VLGCs for $1.05bn.
“The $87.5 million average price per VLGC sets a higher mark than recent shipbroker assessments that indicate valuations closer to $86.5 million (based on the Avance fleet average age),” Jefferies added.
