The VLGC segment has been the best-performing shipping sector of 2023, and with a strong Q4 on the cards, it is on track to beat the year 2015 and record its best-ever year.
VLGC rates remain above $130,000 globally and have averaged more than $80,000 a day in the year to date, closing in on 2015’s record $88,000 a day figure. Analysts at Jefferies note that the FFA curve for the extremely hot gas segment stands at $110,000 a day for the rest of the year.
“The strong market is mainly driven by a number of factors including the exceptionally strong US LPG growth which is a result of low consumption and firm production growth. Other contributing factors, include a strong arbitrage for propane in Asia, the start-up of several new PDH plants in China and strong export growth out of the Middle East,” stated a recent VLGC market update from online pricing portal VesselsValue
“As we head into Q4, US propane inventories remain swollen. Tepid domestic demand and steady production growth remain the story near-term, and we will end the ‘build’ season in October/November at an all-time-high level,” Pareto Securities noted in a recent report adding: “With Chinese PDH demand growth this year in theory exceeding 8m tonnes, that demand alone could support a 5 – 10% growth in long-haul VLGC trade.”