With Greece’s bailout issue
monopolizing local and global news alike, an interesting development in the
shipping market took place; the LPG tanker markets have been pulling away,
moving higher than before. In its latest weekly report, shipbroker Allied
Shipbroking said that “the LPG market has been climbing to some of its highest
levels. It has been of note that rates for VLGCs closed today at US$ 136.250
per day (slightly lower than the peak rate of US$ 136.375 achieved on Friday)
according to the Baltic LPG assessment, which translates to a TCE basis of well
above US$ 4mill per month and is more than a 100% increase from the US$ 60.375
it stood in early January”.
Allied’s George Lazaridis,
Head of Market Research & Asset Valuations, noted that “at the same time,
there has been an increasing amount of vessels been taken on for period time
charters of up to 3 years. This has also led to higher demands in both the LGC
and MGC markets where many hold a very bullish view and looking for ever higher
premiums for any forward fixing. The main support for all of this has been an
increasing appetite for imports by India, which has been the main driver of the
market for almost a year now. At the same time and despite the firm demand from
India, there is a general increase in activity driven by the overall stellar
performance of all energy commodities”.
Lazaridis added that “as such
the firm demand will likely continue, possibly leading to a counter of the high
number of vessels that had been ordered during 2013 and 2014, which now seem
that they could more than easily be covered by the recent growth in demand.
Elsewhere the market is also showing strong signs of life, with markets in
Europe retaining their bullish outlook as expectations are for a flow of fresh
inquiries to emerge in the North Sea region. In the U.S. Gulf, increased activity
from refineries there is easily absorbed by traders while it looks as though we
may be in sight for even higher volumes over the coming months. Demand has also
remained firm in the East, with China countering most of the lag that has
seemingly been left by Japan and S. Korea these past weeks. The only exception
to this trend seems to be slightly softer interest in the MEG region though it
looks as though this is of little concern with activity so abound in most of
the other regions”, he noted.... Click to Read More
Meanwhile, “things have been
holding more moderate in the smaller sizes with limited activity in terms of
small parcels emerging this past week, however it seems that the ample optimism
has had a sort of spillover effect here, keeping rates fairly buoyant despite
what market fundamentals are pointing otherwise. It is no surprise therefore
that it has been the LPG companies that has been able to hold successful IPOs
during these past years, while in cases such as the Oslo-listed Aurora LPG we
have seen a share buyback efforts launched in an effort to hold more of the
gains that are currently been generated. Once again we are faced with the infallible
truth that there are always opportunities to be found under any market
conditions”, Allied’s analyst concluded.
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