File photo: Teekay
(Drewry) – High scheduled deliveries and low demolition prospects will drive unwanted fleet growth of very large gas carriers (VLGC) in 2017 putting additional pressure on freight rates, according to the latest edition of the LPG Forecaster, published by global shipping consultancy Drewry.
VLGC rates remain under pressure on account of ample vessel supply and weak arbitrage opportunities caused by low LPG fuel prices. With 64 additional ships due for delivery next year, fleet growth is expected to accelerate to 12% in 2017, further exacerbating the supply gut.
Shipowners are hoping that a recent revival in VLGC demolitions might help keep fleet growth in check. Two vessels have been scrapped in recent months, the first such demolitions in this segment since 2011. Moreover, the recent Ballast Water Treatment System (BWTS) regulation which requires all vessels to have an in-built BWTS or retro-fit by September 2017 or on their next survey has provided further impetus to hopes of higher scrapping.
However, Drewry believes that there is little scope for demolitions given the young age-profile of the fleet. There are just four ships in the current VLGC fleet over 30 years of age, and a further 13 of between 25 and 30 years.
“Although the average scrapping age could fall sharply in a weak market, we do not expect this to happen in the current VLGC market as there are no signs of panic demolitions yet. Therefore, we believe excess vessel supply is here to stay, which will keep rates under pressure in the next year too,” said Shresth Sarma, senior analyst for gas shipping at Drewry.
© Copyright 2016 | Drewry Shipping Consultants Limited. All Rights Reserved.
Join the gCaptain Club for curated content, insider opinions, and vibrant community discussions.
Join the 108,948 members that receive our newsletter.
Have a news tip? Let us know.
A US aircraft carrier strike group left the Red Sea for Europe weeks after Yemen’s Houthi rebel group said it will stop attacking vessels in the region.
China's retaliatory tariffs on the United States may cause U.S. oil exports to decline in 2025 for the first time since the COVID-19 pandemic, after growth plateaued last year.
A. P. Moller-Maersk A/S, a bellwether for world trade, forecast growth in the global container market as it sees consumer demand defying an intensifying trade war.
Maritime and offshore news trusted by our 108,948 members delivered daily straight to your inbox.
Essential news coupled with the finest maritime content sourced from across the globe.
Sign Up
Join The Club
