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Shresth Sharma News

25 May 2018

Olefin Trade Not Helping LPG Shipowners: Drewry

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% annually over 2012-17, down from 4.0% 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.

28 Feb 2018

Silver Lining for VLGC Shipowners: Drewry

A slowdown in fleet growth should begin the recovery cycle from the second half of 2018, although freight rates will not reach the levels seen during the bull run of 2014-15, according to the latest edition of the LPG Forecaster published by global shipping consultancy Drewry. 2017 was one of the toughest years in the history for VLGC shipping as ample vessel supply squeezed the freight market. VLGC earnings in the spot market (on the benchmark AG-Japan route) averaged $12,500pd; way below the break-even rate of $21,000pd. Shipowners are hoping for a better future as annual fleet growth is set to slow down from 16% in 2016-17 to a more manageable 5% over 2018-19.

27 Nov 2017

Handysize LPG Vessels to be Worst Performers in 2018

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% in 2015 and 2016, and is expected to grow by 9% in 2017. However, shipowners can now breathe a sigh of relief as fleet growth is set to slow down to 5% in 2018 and 3% in 2019, respectively.

26 Oct 2017

Spot LNG Shiping Fleet's Operating Loss US$230m in 2017

The pressure on LNG shipping spot rates will continue for another year on account of strong fleet growth. However, rates should strengthen from 2019 as fleet growth slows and trade remains strong, according to the latest edition of the LNG Forecaster report published by global shipping consultancy Drewry. Spot rates (East of Suez) for modern LNG vessels averaged $33,000pd in the nine months to September 2017, an increase of 5% compared with the same period last year. While current spot rates are enough to cover operating costs of around $15,000pd, they are still below breakeven, which ranges between $45,000pd and $60,000pd. Drewry Maritime Financial Research calculates that the global spot fleet will make aggregate operating losses of USD 230m in 2017.

14 Aug 2017

VLGC Asset Values to Fall in Sync with Freight Outlook: Drewry

Given the weak freight rate outlook for LPG shipping over the next twelve months, Drewry believes there is more downside risk to the second-hand values of very large gas carriers (VLGCs), according to the latest edition of the LPG Forecaster, published by global shipping consultancy Drewry. Shipping analysts have been bearish on the VLGCs market since the beginning of the year and rates so far have been in line with expectations. Vessel earnings in the spot market are currently below operating cost. Drewry maintains a bearish outlook and believes that the next twelve months will continue to be tough for VLGC owners due to strong fleet growth. The recovery phase will not start until the second half of 2018 as fleet growth slows as a consequence of weak ordering over the past 18 months.

16 May 2017

Small Vessels Boost LPG Freight Rate: Drewry

Vessel oversupply will persist in the LPG shipping market for the next two years, keeping freight rates under pressure across most size segments. However, the small vessel segment is the only category where fleet growth will be minimal, leading to a recovery in rates, according to the latest edition of the LPG Forecaster, published by global shipping consultancy Drewry. Most vessel size segments are expected to witness another year of rapid supply growth in 2017, with the overall fleet forecast to expand by 16%. This will keep freight rates under pressure over the next two years. However, the small LPG vessel segment (1,000-5,000 cbm) will be the exception where fleet growth will be minimal and rates are expected to improve.

25 Apr 2017

Drewry Trims Long-Term Freight Rate Outlook for LNG shipping

Given the mounting pressure on freight rates and continuing fleet growth over the next two years, Drewry believes that excess vessel supply will reduce only gradually with the recovery in rates pushed back to the latter part of next year, according to the latest edition of the LNG Forecaster report published by global shipping consultancy Drewry. Drewry maintains a bearish stance on the LNG shipping freight rate outlook for 2017 on account of strong fleet growth which is expected to be around 13%. The movement in rates has so far been in line with Drewry’s expectations, as rates have been falling since the beginning of year. The spot rate for dual-fuel diesel-electric (DFDE) vessels (East of Suez) is currently around $26…

15 Feb 2017

Oversupply Pressure on LPG Shipping Rates

The LPG shipping trade will continue to grow at a healthy pace on the back of strong Asian demand, but fleet growth will outpace it, keeping rates under pressure in 2017, according to the latest edition of the LPG Forecaster, published by global shipping consultancy Drewry. 2016 was a tough year for LPG shipping with rates coming under pressure across all size segments. 2017 is expected to be no different with the fleet set to grow by another 16%, on top of the 17% expansion seen last year. Asia-Pacific countries have been the major drivers of the LPG trade for several years, and imports to this region have grown at a robust rate of 12% annually over the last four years.

30 Jan 2017

Strong Fleet Growth to Keep LNG Shipping Rates in Check

2017 will be a tough year for LNG shipowners as rates are expected to remain under pressure, according to the latest edition of the LNG Forecaster report published by global shipping consultancy Drewry. This year has started on a positive note for LNG shipowners as spot rates have firmed up to the West of Suez because of seasonal demand for LNG. Many analysts have started writing positive stories about the LNG shipping market believing that the momentum in rates will continue. However, Drewry reiterates its outlook that the fundamentals of LNG shipping market are not strong enough to sustain this recovery for long. Soon rates will come under pressure as seasonal demand wanes from April onwards.

02 Nov 2016

LNG Shipping Under Threat from Cargo Diversions

If Asian buyers continue to divert their contracted supply from the US towards Europe and Latin America, it will reduce demand for LNG vessels in the long term by cutting down on long-haul trade, according to the latest edition of the LNG Forecaster report published by global shipping consultancy Drewry. Drewry has been maintaining a bullish long-term outlook for LNG shipping for quite some time and expects rates to improve substantially from 2018 onwards. One of the major reasons for this outlook is the expansion in US LNG supply. Since most new LNG export capacity in the US will start to come online from 2018 onwards and almost 85-90% of this supply has been tied to contracts, the trade will create demand for a large number of vessels.

29 Jul 2016

LNG Market Needs More Vessels than Currently on Order

Despite the current weakness in LNG shipping rates, Drewry maintains its bullish long-term outlook for LNG shipping and believes that the market will require more vessels than listed on the current orderbook, according to the latest edition of the LNG Forecaster report published by global shipping consultancy Drewry. Spot rates for dual fuel diesel electric LNG vessels have been hovering around $30,000 per day since the second quarter of last year, representing a decline of 80% compared to the last market peak in 2012. Strong fleet growth coupled with weak cargo demand has been the principle cause. The impact of weak rates is clearly visible on falling newbuilding activity as only four LNG vessels had been ordered in the first six months of the year.

18 May 2016

Rising VLGCs fleet Impact LPG Freight Rates

LPG shipping freight rates are forecast to deteriorate further through 2016 as a result of the fast rising fleet of Very Large Gas Carriers (VLGCs) which has already started to impact earnings of smaller vessel classes, according to the latest edition of the LPG Forecaster, published by global shipping consultancy Drewry. VLGC freight rates have been in free-fall since August 2015 as fleet growth has continued to outpace demand. Over this period as many as 41 VLGCs have been delivered and as a result, spot rates for these vessels touched a six-year low of $25 per tonne in April on the benchmark AG-Japan route. In line with falling spot rates, time charter rates for VLGCs have also come under pressure, averaging $800,000 per month in April, 55% down on the same period last year.

29 Apr 2016

Pressure Steady on LNG Shipping Rates -Drewry

LNG shipowners will have to wait until 2018 for earnings to improve, when the majority of new US plants are expected to come online, according to the latest edition of the LNG Forecaster report published by global shipping consultancy Drewry. The first quarter of 2016 was no better than the previous quarter for LNG shipowners as spot rates remained low at around $30,000pd. Two new liquefaction plants, Australia Pacific LNG (APLNG) in Australia and Sabine Pass LNG in the US, began operations in the first quarter of 2016. But freight rates for LNG carriers remain low despite the new liquefaction trains coming online. The ramping up of Australian LNG exports will not bring any respite to LNG shipowners given the short-haul voyage distance between Oceania and Asian markets.

03 Feb 2016

LNG Shipping Rates to Remain Under Pressure in 2016

LNG shipping earnings will remain under pressure in 2016 as accelerating fleet growth and changing trade patterns will weaken supply-demand conditions, according to the latest edition of the LNG Forecaster report published by global shipping consultancy Drewry. LNG vessel fleet growth is forecast to double this year to 12 percent, compared to 6 percent in 2015. Meanwhile, as new sources of LNG supply kick in from projects coming online in Australia, demand for spot cargoes from the Middle East are expected to weaken which will adversely affect overall tonne mile demand for LNG shipping. The final quarter of 2015 was disappointing for LNG shipowners, despite a seasonal uplift in demand for winter fuels.

07 Dec 2015

Drewry: LPG Shipping Rates Heading for a Fall

VLGCs supply-demand gap (Source: Drewry Maritime Research)

LPG shipping rates are expected to decline from the second half of 2016 as a bloated orderbook for VLGCs (very large gas carriers) fuels fleet growth that will far exceed shipping demand, according to the latest edition of the LPG Forecaster, published by global shipping consultancy Drewry. VLGC earnings have had another stellar year, averaging above $2.0 million per calendar month in the period to September 2015. This has been driven by three principle factors: rising US exports…

30 Oct 2015

LNG Shipping Under Pressure from Tumbling European Re-exports

LNG shipping freight rates continue to be under pressure from weak Asian demand and a growing fleet. Shipowners are now pinning hopes on a revival in European demand. However, European LNG demand growth will not be sufficient to raise freight rates, according to the newly launched LNG Forecaster report published by global shipping consultancy Drewry. Until the recent fall in oil prices, Asian LNG prices were at a premium compared to piped gas prices in Europe. European traders therefore preferred to re-export cargoes to more profitable Asian markets (see figure below). This helped to create substantial shipping demand as vessels found employment on both legs of the trade, first in import and then in re-export.

18 Aug 2015

Challenging Times Ahead for LNG Shipping

Global LNG Trade and Drewry LNG Liquidity Ratio per quarter (2013-2015YTD). Source: Drewry Maritime Research

LNG carrier freight rates have come under severe pressure due to rising fleet supply and stabilizing LNG demand, as Japan prepares to restart its nuclear power plants. Despite the general market belief that new LNG supply from Australian projects will provide ample employment to the growing fleet, there are immediate challenges on freight rates. This is due to 49 million tonnes per annum (mtpa) of Australian LNG cargo supply expected to hit the market over the next two years, according to the newly launched LNG Forecaster report published by global shipping consultancy Drewry.

20 May 2015

LPG Coaster Shipping Market to Remain Weak in 2015

Freight Rates (Source: Drewry's LPG Forecaster)

The LPG coaster shipping market continues to be plagued by excess vessel supply with rates remaining stubbornly below pre-financial crisis levels, according to the latest edition of the LPG Forecaster, published by global shipping consultancy Drewry. “Average 12-month LPG coaster time charter rates fell almost 15% between 2007 and 2014”, said Shresth Sharma, senior analyst, gas shipping at Drewry. “And in the case of smaller vessel classes such as coasters a small change in rates can have a significant impact on operator profitability”, continued Sharma.