Increased exports to keep VLGC rates high: BW LPG

Market: LPG
29/08/23

Oslo-listed shipowner BW LPG expects strong exports from North America and the Middle East to sustain high very large gas carrier (VLGC) rates for the remainder of 2023.

BW LPG forecasts that both production and demand will increase in 2023 and beyond, on the back of current oil price trends and new Chinese propane dehydrogenation (PDH) plants scheduled to open this year. The company is seeking a dual Oslo-US listing to expand its investor base.

Newbuild vessel deliveries are currently scheduled to slow from January 2024, BW LPG said, but additional VLGCs orders could add pressure to rates.

The firm's profits doubled to $78.2mn in the second quarter of 2023 from $38.6mn a year earlier, buoyed by higher spot rates and higher fleet utilisation. BW LPG fleet's time charter equivalent (TCE) rate reached $51,600/d during the quarter, up from $35,400/d a year earlier.

"Robust demand for LPG from east Asia has been met by ample supplies from both North America and the Middle East. This dynamic has given rise to a highly favourable propane arbitrage, supporting the 5pc and 19pc year-on-year export growth during the second quarter of 2023 for North America and the Middle East, respectively," the firm said.

Rates have been well above average this summer season compared with previous years. The Argus Ras Tanura-Chiba VLGC freight rate averaged $95.52/t in April-June 2023, compared with $76.06/t in the second quarter of last year, while the average Houston-Chiba rate increased to $143.23/t from $121.74/t over the same period.

The company's fleet consists of 45 VLGCs, eight of which are operated by a subsidiary in India.

By Yohanna Pinheiro

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