Olefin trade not helping LPG shipowners
Waste Management Expo 2020 MAR 12&13 BIEC, Bengaluru, India

Olefin trade not helping LPG shipowners

9:14 AM, 16th July 2018
Olefin trade not helping LPG shipowners
Although s/r vessels can also carry LPG, the market is oversupplied with bigger f/r vessels. © Ada Derana

The freight market for S/R (Handysize) vessels will remain under pressure throughout 2018 on account of strong fleet growth and weak olefin trade, according to the latest edition of the LPG Forecaster published by global shipping consultancy Drewry.

The market has been under pressure since 2017, but olefin trade growth has averaged 3.1 percent annually over 2012-17, down from 4.0 percent during 2007-12. Although s/r vessels can also carry LPG, the market is oversupplied with bigger f/r vessels and there is limited employment opportunity in this trade for handysizes.

There are several factors explaining the weak trend in olefin trade, ranging from sporadic production problems in the Middle East to tepid growth of the global economy.

Moreover, there is also a preference to export olefin derivatives rather than olefins themselves on account of better margins in the former. For instance, during the first quarter of this year in the US, the difference between ethane and ethylene prices was around $335 per tonne and that between ethylene and HDPE (injection grade) was around $745 per tonne, thus leaving a greater incentive to produce HDPE.

“Considering these factors and port infrastructure development, we are of the view that the olefin trade is unlikely to grow strongly in the short term,” commented Shresth Sharma, lead analyst for gas shipping at Drewry.

Fleet growth in the Handysize segment will remain strong, at 9 percent in 2018, which will keep the freight market for these vessels under pressure throughout the remainder of the year.

“However, as the fleet growth slows down from 2019 and gas trade (olefin and LPG combined) continues to expand around its organic pace of 4 percent annually, the freight market should start recovering in 2019,” added Sharma.

© 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

Potentially cheap, efficient, eco-friendly system for purifying natural gas

Experts in different gas separation methods have worked together to explore a new integrated system, which promises to enhance natural gas purificatio ...

Read more
Advanced biofuels can be produced extremely efficiently

A chance to switch to renewable sources for heating, electricity and fuel, while also providing new opportunities for several industries to produce la ...

Read more
New catalyst turns ammonia into an innovative clean fuel

Taking measures against climate change and converting into societies that use significant amounts of renewable energy for power are two of the most im ...

Read more
Oil-eating bacterium can help clean up pollution and spills

An enzyme derived from a bacterium cleans soil contaminated by petroleum-based products in a simple, effective, and environmentally-friendly manner. ...

Read more
Dyes used to enhance performance of electronic devices

Introduction The electric conductivity dyes are suitable for both DC conductivity and AC conductivity, and it is used for enhancing the performance o ...

Read more
Total completes acquisition of Engie's upstream LNG business

PARIS, FRANCE: Total SA has completed the acquisition of Engie’s portfolio of upstream liquefied natural gas (LNG) assets for an overall enterpr ...

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