John Fredriksen-controlled Avance Gas has presented a positive market outlook for VLGCs despite a smaller second-quarter profit.
Spot VLGC earnings have pulled back from the strong level seen in spring but remain high enough for most owners to make decent profits.
The Oslo-listed shipowner said the supply-demand fundamentals remain strong due to rising LPG production in the US and Middle East, healthy Chinese and Indian demand, and moderate fleet growth.
“We expect a continued growth of US production and increased Opec+ output the next 13 to 14 months, suggesting a continued recovery in second half this year and 2022,” Avance Gas said in a quarterly report.
The company expects Chinese demand to grow by 4m tonnes to 5m tonnes this year with new, propane-fed petrochemical plants coming online.
“Additionally, Indian demand is looking to surprise on the positive side,” said Avance Gas, pointing to a 7% growth in the first half of 2021 from the same period of last year.
The VLGC orderbook is composed of 73 vessels, roughly equivalent to 23% of the existing fleet, according to the company’s figures.
“There is moderate fleet growth until 2023, supporting a positive outlook for the second half of this year and next year,” Avance Gas said.
The company recorded net profit of $1.47m in the second quarter, down from $6.71m for the same period of last year.
Operating revenue fell to $48.7m from $50.2m as vessel earnings decreased.
Avance Gas’ fleet achieved an average time-charter equivalent rate of $27,730 per day, down from $28,932 per day in the second quarter of 2020.
“During the second quarter, the number of US liftings have been on historical high levels driven by terminal expansions,” the company said.
“Despite a record high number of liftings out of the US, the VLGC freight market has been impacted by low US inventories and a narrow US-Asia price arbitrage.”
The company declared a dividend of $0.02 per share in the second quarter, down from $0.14 in the first.
