Handysize LPG vessels be worst performers in 2018

Handysize LPG vessels to be worst performers in 2018

5:09 AM, 15th March 2018
Drewry rates small LPG vessels to be the best performer in 2018. © Epic Gas
Drewry rates small LPG vessels to be the best performer in 2018. © Epic Gas

Among the different size categories of LPG ships, the small vessel segment is expected to be the best performer in 2018 while Handysize vessels will be the worst, according to the latest edition of the LPG Forecaster, published by global shipping consultancy Drewry.

The LPG shipping market is currently oversupplied with vessels (with the exception of the small segment 1,000-5,000 cbm), as a result of strong fleet growth during the last three years. The global LPG fleet expanded at an annual average rate of 17 percent in 2015 and 2016, and is expected to grow by 9 percent in 2017. However, shipowners can now breathe a sigh of relief as fleet growth is set to slow down to 5 percent in 2018 and 3 percent in 2019, respectively.

As growth rates vary among size segments, Drewry has looked into the freight rate prospects of different size category of vessels and believes that Handysize ships (12,000-25,000 cbm) will be the worst performers in 2018, while small LPG vessels (1,000-5,000 cbm) will be the best. Fleet growth will be the main catalyst for their freight rate outlook.

Ample supply will keep charter rates under pressure, as the expansion of long-haul LPG trade will tend to favour VLGCs and MGCs. Moreover, the Olefin gases trade will not be strong enough to keep all handysize vessels employed. By contrast, fleet growth in the small LPG vessel category will be negative on the back of a thin orderbook and expected demolitions, which will support freight rates for this segment.

The above figure shows Drewry’s EBITDA forecast for different vessel types, which has been calculated by subtracting vessel operating costs from the time charter rate forecast. “In absolute terms, VLGCs have the highest EBITDA, while small coasters have the lowest. However, in order to make a better comparison, we have calculated the payback period, based on the price of a five-year old vessel in each segment and our EBITDA forecast for next year,” commented Shresth Sharma, senior analyst for gas shipping at Drewry.

“Our estimates point out that the small LPG segment will return the investment in eight years, while in the Handysize segment it will take 19 years,” added Sharma.

Source: Drewry Shipping Consultants Limited

© Chemical Today Magazine 

See the Report in Chemical Today magazine


View the magazine on Mobile, download the Chemical Today magazine app





Your Comments (Up to 2000 characters)
Please respect our community and the integrity of its participants. WOC reserves the right to moderate and approve your comment.

Related News

Developing new way to create nanoscale emulsions

Emulsions, or oil-water mixtures, are of common occurrence in our daily lives. “In fact, our life begins with emulsions. When a baby is born th ...

Read more
Graphene wearable sensor tracks baby vital signs

A wearable device that tracks the heart rate and breathing of babies has been developed by University of Sussex scientists for parents concerned about ...

Read more
Miniature analytical proportional valve for analytical instruments

Parker Hannifin Corporation announced the release of its newest model for the miniature proportional valve VSO® family – model VSO® LowP ...

Read more
Ultra-pure diaphragm valve for demanding applications

GEMU 677HP PurePlus series exhibit improved properties with regard to the relationship between pressure and temperature. This makes them perfect for ...

Read more
Manufacturing analytics for operation excellence

By Rajesh Kambaladinne and Manish Tiwari Introduction                 ...

Read more
Valveless dispensing pump for medical, analytical, biotech instrumentation

Fluid Metering Inc (FMI) introduces their new 400 μL dispensing pump ideal for medical, analytical and biotech instrumentation. The STF1-9 expands ...

Read more
www.worldofchemicals.com uses cookies to ensure that we give you the best experience on our website. By using this site, you agree to our Privacy Policy and our Terms of Use. X