Nasdaq-listed Navigator is paying Jiangnan Shipyard $78.4meach for trio of 35,000-cbm ethylene/ethane semi-refrigerated vessels, itannounced today.
The order lifts its tally of ships under construction at theyard to four as it looks to cash in on the anticipated rise in US exports.
In total the company now has 13 newbuildings on order withfour set for delivery this year, four in 2015 and five the following year.
As the largest carriers of their kind, they will be capableof transporting the full range of LPG products such as propane and butane, aswell as petrochemicals, Navigator said in a statement.
Dual fuel engines will reduce running costs while larger capacitiesoffer greater economies of scale, it added.
Navigator primed to prosper
Navigator is well placed to benefit from the anticipated surgein US exports precipitated by the shale gas boom, Global Hunter Securities saidin a research note following the announcement.
Enterprise Products Partners (EPD) yesterday unveiled plansto construct a large-scale ethane export terminal in the US Gulf Coast by 2016.
Analysts led by Omar Nokta said the new facility will tightenvessel capacity when it comes on stream and should push domestic charter rateshigher.
“We had previously forecast a 22,000 cbm semi-refrigeratedships to earn $30,000/day on the spot market for the 2015 through 2017 period,but we are raising our forecast to $32,000/day for 2015, $34,000 for 2016 and$35,000 for 2017,” said GHS.
“We believe our forecasts are conservative given currentspot rates are averaging around $32,000/day.”
The new facility's 240,000 barrels per day capacity will require 25carriers of 35,000-cbm to export the increased production which is also likelyto drive further LPG ship orders, GHS said.
Both GHS and Ben Nolan at Stifel say long-term charters for Navigator's vessels under construction will not be far behind.
GHS has maintained its buy rating on Navigator’s stock andraised its price target to $32 per share from $29 per share previously.
