Report delivers mixed outlook for LPG carrier market

Report delivers mixed outlook for LPG carrier market Operating profits in the liquefied petroleum gas market will fluctuate over the next decade as new tonnage bought at record high prices will struggle to cover total costs after delivery, according to a report by United Kingdom-based Ocean Shipping Consultants Ltd.
   The report, entitled LPG Trades & Shipping: Prospects to 2018, forecasts that the world LPG fleet will expand from 15.4 million cubic meters at the beginning of 2007 to 26.9 million cbm by 2018, while the world seaborne LPG trade (including ammonia and petchems) will increase from 88 million tons to 137 million tons over the same period.
   The LPG carrier order book totals about 7.3 million cbm (162) vessels, equivalent to 48 percent of the current fleet capacity, OSC said. The consultants added that the new builds more than compensates for future scraping levels and the substantial increase in fleet capacity will have a “significant negative impact” on freight rates in the near term.
   The report predicts that operating profits for very large gas carriers (VLGCs), which account for 56 percent of the fleet capacity, will fall to $0.52 million per month by mid-term, rising to $0.95 million/month by 2014 before dropping again by the end of the study period.
   “The mixed market outlook highlights the critical nature of timing in purchasing and chartering programs in shaping overall vessel profitability,” OSC said.