Cautious Optimism in LPG Shipping: Dorian LPG
Global liquefied petroleum gas (LPG) export volumes for the calendar 2015 reached 80 million metric tons, an 11 percent increase over the previous year.
U.S. LPG exports alone reached a record of nearly 21 million metric tons, which is a 50 percent increase over the previous year.
The U.S. became the largest LPG exporter in the world, accounting for 25 percent of the global seaborne export volumes, which were shipped to Central and South America, Asia, and Europe and the Mediterranean at about 43 percent, 29 percent and 26 perecnt, respectively.
The strong LPG export volumes from the U.S. Gulf and in particular large cargo movements (on VLGC vessels) from West to East have increased ton-miles for the segment Dorian LPG has focused on and has supported shipping demand for VLGC vessels.
Other LPG exporting regions have shown export growth in 2015 and have generally contributed to a generally stronger Baltic rate market resulting in strong utilization and freight rates seen by VLGC vessels.
Propane and Butane prices have followed crude oil prices downward, making LPG attractive not only to the retail domestic markets, but also to the petrochemical industries around the world.
The continuing U.S. LPG export capacity growth is evident with the recent Enterprise expansion, the expected Marcus Hook Mariner East export terminal (commencement in February 2016), the Petrogas terminal (expected capacity increase of 0.35 million tons during 2016), and the Phillips 66 terminal at Freeport, Texas (4.4 million tons annual capacity expected to open in the fourth quarter of 2016).
We therefore expect that U.S. LPG export volumes may reach higher levels in 2016, which would support additional ship supply and a reasonably robust freight rate market environment for the sector.
While these factors continue to support strong fundamental demand for LPG and LPG shipping, there can be no assurances that such trends will continue or that anticipated future freight rates, export capacity, or export volumes will materialize.
Each of our newbuildings is an ECO-design vessel incorporating advanced fuel efficiency and emission-reducing technologies.
Upon completion of our VLGC Newbuilding Program with the final VLGC scheduled to be delivered to us in February 2016, 100 percent of our VLGC fleet will be operated as sister ships and the average age of our VLGC fleet will be approximately 1.6 years, while the average age of the current worldwide VLGC fleet is approximately 10.2 years.
