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Week 41
-Shipbrokers and consultants since 1919-
Weekly Gas Report
HIGHLIGHTS
VLGC: Baltic Index
bottoms out
Ammonia: Prices sidelining in quiet market
Handy: Market remains
firm
Coaster: Downwards pressure still evident
“If it doesn’t challenge
you, it won’t change you!”
VLGC
NH3
HANDY
As this week draws to a close, we
firmly believe that the floor of the
Baltic Index has been reached
and that the Index will turn
around. A fair few vessels have
been fixed over the past few days
with more out firm. Combine this
with the continuing trend of West
loaders heading East and it is
evident that the balance of the
market is easily influenced. With
the chance of repeating ourselves, with a fleet of less than
150 trading vessels, a sudden
addition to tonne miles as experienced this this fall will have a big
market impact. Further, the present downward pressure on LPG
prices will stimulate further demand, a situation seen before.
The LPG market is price sensitive
and lower prices is likely to boost
household demand.
The quiet market is causing contract requirements to be lowered,
as buyers are seen to be cutting
operating rates to about 70%.
Production issues are also having
an impact, and prices which previously picked up on the latter
weeks’ more bullish conditions
are holding steady at around
US$600 fob Middle East and
US$630 cfr Far East. In the Black
Sea OPZ’s ammonia and urea line
is under threat from severely
weakened gas supply, but is still
operating. The depletion of supply looks set to continue as the
Ukrainian government has ruled
to cut off local fertilizer producers
from any gas supply, but market
players are hoping a deal between Ukraine’s Naftogaz and
Norway’s Statoil will reverse this
ruling.
The handy size market has continued in the same fashion as the
past weeks with not much activity
in the spot market. In the short
term we can expect little change
in the market, with interest in
handy size vessels remaining
strong, even with the current
high rates demanded by owners. Eletson have an open position end of next week in Morocco, however we have to look into
November for the next open
owner vessel. As a result the
handy size market remains firm
with freight rates stable.
It is uncertain where the LPG will
go in the future, but we are fairly
certain that a new trading pattern
is about to materialize. There is
plenty of LPG, there is demand
for all of it; at a price. We are
indeed living in a changing world
and history should have taught us
that new trades, changing arbitrage and trade opportunities
often lead to inefficiency in shipping.
Far East supply might see a boost
following the restart of Yara’s
Pilbara plant in Australia. The
company is reported to have a
number of contract deliveries to
the Far East throughout October.
Demand in the Far East is however showing signs of softening with
buyers having secured cargo already.
The coaster markets are still experiencing downward pressure
on freight rates. We are seeing
numerous spot fixtures being
concluded at Time Charter Equivalents way below 1 year rates for
nearly all sizes, but especially on
the 3500-5000m3 pressurized
ships. As a result we believe Charterers will have a strong appetite
for relying on the spot market,
and will not show interest in fixing ships on period basis before
Time Charter rates have further
decreased.
VLGC Timecharter Equivalent (TCE)
US$/month
4,000,000
3,700,000
3,400,000
3,100,000
2,800,000
2,500,000
2,200,000
1,900,000
1,600,000
1,300,000
1,000,000
700,000
400,000
100,000
-200,000 1
-500,000
COASTER
3
5
7
9 11 13 15 17 19 21 23 25 27 29 31 33 35 37 39 41 43 45 47 49 51
5 YR LOW
1
5 YR HIGH
5 YR AVG
2014 Ytd
Week no
-Shipbrokers and consultants since 1919-
LPG
LPG prices shredding
US$ 40-50 in all region on tumbling
crude
Prices in the North West European market stumbled under
pressure from sharp crude and
naphtha falls. Brent bled ended
the week around US$ 89 bl.
Propane and butane ended the
week down US$50 and 45 respectively on the bearish sentiment. The arbitrage from the US
declined to under US$ 45. Petchem producers were still looking to resell LPG with naphtha
the preferred feedstock. Butane
declined to 85% of naphtha on
the news that a large ethylene
cracker will be shut down for
the rest of the year.
In the Middle Eastern Gulf, activity was dismal in a market
flush with Fob cargoes, but with
few buyers. Spot discounts to
October CP widened sharply.
November CP swaps ended the
week at US$ 718.
Asian household sector. The
situation is very different in the
petchem sector where the price
of LPG now is at near parity with
naphtha instead of the 10% or
so discount necessary to spur
petchem sector buying.
The Asian LPG market saw price
plunging as traders returned
from holiday. Storage levels
were reported to be high in
Japan. As prices dived Chinese
buyers were looking to secure
lower priced produce as domestic prices moved higher. The
sharp price falls will be a bon for
the household sector as demand
is impacted by absolute prices.
Low LPG prices could trigger a
surge in demand in the large
US propane prices succumbed
to sharp crude falls and LST
propane fell below 100 cent per
gallon. A further strong build in
propane inventories also played
its part as the EIA reported a
larger than expected inventory
build of 1.085 ml bl to 80.645 ml
bl. Lower crop drying demand is
expected to have contributed to
the stock build.
LNG
SCF (Sovcomflot) has sold SCF
Arctic, a 1969 built LNG carrier
for scrap. The 71,500cbm ships
with a scrap weight of 19,165
fetched US$ 565 per ldt or US$
10.8 million basis as is Gibraltar.
The price refects a high content
of nickel and stainless steel.
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Japanese LNG imort prices for
spot cargoes averaged US$ 11.30
per MMBtu, down from 12.50 in
August. Long term cargo
contract prices are declining as
the price is linked to the
Japanese Crude Cocktail.
Total is looking to advance its
Papua New Guinea LNG export
project based on onshore feedgas. The project under planning
comprises of a 700km pipeline
connecting the onshore production facilities with a 6.9mtpa LNG
plant with export infrastructure.
-Shipbrokers and consultants since 1919-
FIXTURES
SPOT
Vessel
PROMISE
CAPTAIN NICHOLAS ML
THETIS GLORY
MORSTON
HELLAS SERENITY
NORDIC GAS
SIGAS SONJA
B GAS COMMANDER
TBN UNIGAS
Built
2009
2008
2008
2013
2008
1994
2007
1996
NA
Cbm
84718
82000
81992
81000
80791
20700
4934
1970
NA
Qty
44'
44'
44'
45'
44'
FC
2'5
FC
3'7
Cargo
LPG
LPG
LPG
LPG
LPG
LPG
PROPANE
LPG
PROPANE
Load
BETHIOUA
AG
AG
HOUSTON
BETHIOUA
MARCUS HOOK
TEES
GRANGEMOUTH
GRANGEMOUTH
Disch
EAST
EAST
EAST
OPTS
EAST
OPTS
DUNKIRK
TEES
ARA
Laycan
END OCT
20-25 OCT
19-20 OCT
3-4 NOV
1H NOV
ELY NOV
10-12 OCT
07-09 OCT
12-14 OCT
Rate US$
150 BSS CHIBA
ABT 92
92
85 BSS FLUSHING
150 BSS CHIBA
RNR
RNR
RNR
RNR
Charterer
SHELL
SHELL
TOTAL
PETROBRAS
TOTAL
SHV
CONOCO
PETROINEOS
ENI
RATES
The Baltic Exchange LPG Index
44’LPG Ras Tanura/Chiba
Weekly Baltic average
Baltic TC Equivalent
(US$/pmt)
(US$/pcm)
(US$/pd)
Last Week
99.65
2,604,048
85,603
This Week
94.68
2,471,850
81,257
Trend
Softening
Softening
Softening
12 months Time Charter - Indicators
3.200 cbm S/R
3.500 cbm P/R - East
3.500 cbm P/R - West
5.000 cbm P/R
6.500 cbm S/R
10.000 cbm ETH
20.000 cbm S/R
35.000 cbm
60.000 cbm
82.000 cbm
Last Week
(US$/pd)
7,890
6,903
7,232
9,369
13,642
19,395
36,160
32,873
52,597
62,459
This Week
(US$/pd)
7,890
6,739
7,068
9,204
13,478
19,066
36,160
32,873
52,597
62,459
This Week
(US$/pcm)
240,000
205,000
215,000
280,000
410,000
580,000
1,100,000
1,000,000
1,600,000
1,900,000
Trend
Steady
Softening
Softening
Softening
Softening
Softening
Steady
Steady
Steady
Steady
VALUATIONS
We provide expertise valuations for a number of ship owning and banking clients worldwide, covering all types of gas carriers either on a
regular basis (quarterly, semi-annually) or on an ad hoc basis. Our experienced team is fully updated on the latest secondhand and newbuilding price trends and maintain a comprehensive database with historical prices. We strive to maintain an unbiased approach to valuations, which are carried out in due diligence and in accordance with established ISO procedures.
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-Shipbrokers and consultants since 1919-
PRODUCTS & PRICES
LPG, Natgas, Crude, IFO380
NWE
CIF ARA Small
US Mt Belvieu
Non-LST
NWE Propane Swaps
Q1 forward
Q2 forward
MEG
Contract Price
Japan CFR
NG, Crude & IFO380
NG, NYMEX
WTI, Crude - Spot
IFO380, Fujairah
Propane
usd/pmt
Change from
last week
Butane
usd/pmt
Change from
last week
604.00
-9.60%
645.00
-8.53%
509.89
-7.45%
536.66
-3.47%
635.00
633.00
-9.45%
-7.90%
735.00
783.00
0.00%
-4.98%
765.00
803.00
0.00%
-4.86%
3.85
84.41
538.00
-3.69%
-8.36%
-5.39%
usd/mmbtu
usd/bbl
usd/pmt
Various Sources
Name
Brokers
Anders Lalim
Martin Engelsen Hals
Katie Du
Sebastian Isaksen
Henrik Konow Verlo
Research
Knut Stangebye Olsen
Operation
Håvard Teigland
Spyros Bampetas
Office
Mobile
Yahoo Messenger
(+47) 2252 7707
(+47) 2252 7783
(+47) 2252 7736
(+47) 2252 7737
(+47) 2252 7755
(+47) 905 30 930
(+47) 909 39 949
(+47) 901 54 760
(+47) 958 00 214
(+47) 924 65 307
la_limno
martinengelsenhals
katiemin1209
sebastian.isaksen
hkverlo
(+47) 2252 7703
(+47) 952 48 490
knutstangebyeolsen
(+47) 2252 7733
(+30) 2108 9000 62
(+47) 980 43 763
(+30) 6973 38 2273
havardteigland
spyrosbampetas
Email:
Phone:
Fax:
lorgas@lorstem.no
(+47) 2252 77 00
(+47) 2252 78 64
Lorentzen & Stemoco AS
Munkedamsveien 45
8th floor, lift E
PO Box 2029 Vika,
N-0125 Oslo, Norway
www.lorstem.com
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