The Liquefied Petroleum Gas Market in 1998
- 10-22,000 cbm LPG carriers
These semi-refrigerated ships have continued to be badly hurt by the
lack of activity in the petrochemical gas market. Also in this area, major controlling
agreements were confirmed between owners.
Exmar placed its three ethylene Polar carriers, each of 10,500 cbm, with
the Bergesen / Igloo pool. Hydro entered its four 15,000 cbm ships with AP Møller while
taking over three of AP Møller's four 35,000 cbm vessels.
We now have a situation where the Bergesen / Igloo pool controls a total
of 21 ethylene carriers ranging between 8,000 cbm and 12,500 cbm, whilst AP Møller is
marketing some 25 semi-refrigerated ships sized from 15,000 to 20,500 cbm.
It is somewhat difficult to assess exactly what was the precise impact
of such restructuring as no one can say what would have transpired if it had not taken
place. However, we can say that such concentration did not permit avoidance of idle time
for some units and some rumours about eventual lay up were heard but not confirmed. In the
meantime, the long discussed "Cambridge project" of taking over the Bergesen /
Igloo pool, Fredriksen and Gebab ethylene carriers - to create the major operator in this
sector - did not materialize.
A few time charter transactions were concluded at a level ranging
between $325,000 and $450,000 monthly for 12,000-15,000 cbm semi-refrigerated ships on a 3
to 12 months term basis. A new 12,500 cbm ethylene carrier recently delivered from a
German yard was contracted for a long term charter of 10 years with two optional 5 year
periods for North West Europe ethane trading.
1999 will see the delivery of few newbuilding units within such size
segment, among which 17,000 dwt chemical carriers having 10,000 cbm gas capacity (minus
10°), which is an interesting new approach.
After seven years of experience, the Westfal Larsen group threw in the
towel at the beginning of the year and offered AP Møller the possibility of controlling a
large part of the world fleet of 15,000-20,000 cbm ships by selling the
"Reinanger", the "Risanger" and the "Ravnanger" (15,000 cbm,
built in 1990/1991) and two 20,000 cbm vessels under construction in Japan (the
"Maersk Humber" delivered in September, the next scheduled for delivery in
1999), for a total amount of $200 million.
As for the "Viking Star" (15,000 cbm, built in 1976), there
again it was necessary to accept a bareboat charter to obtain a price of about $13
- 3,000-9,000 cbm LPG carriers
Concentration moves have also affected this size segment with Schulte
joining the Unigas pool and a joint marketing venture between Gaschem and Medgas pool.
LGS of Edinburgh, one of oldest partners of Unigas pool, having
contracted several newbuildings over the past two years (6,250 and 8,600 cbm), has now
decided to take over the marketing of its ships (Tarquin International), representing a
total of 15 semi-refrigerated ships within a size range of 3,400 to 8,600 cbm.
The petrochemical gas market did not supply regular employment for those
ships although a slight improvement was observed during last quarter from the South East
Asia / Far East inter-regional markets.
The pressure ships, mainly employed on LPG, were traded at very low
levels, reaching rock bottom levels not seen in recent years - ie $125,000 monthly for a
5,000 cbm pressure ship on three to five month time charter basis - and quite a few of the
previous t/c commitments were not renewed. Charterers preferred to play spot or cover
their requirements with contracts of affreightment.
5,060 cbm, blt 1984
owned by Naftomar Shipping
In order to be able to sell in 1998, with the disappearance of Chinese
and Far East buyers, it was necessary either to offer ships with attached employment or to
accept a sale on the basis of a bareboat charter, and even then only on condition that the
ship was no more than 20 years old.
It was in this context that, at the beginning of the year, the MC
Shipping group in Monaco continued its 1997 policy, reinforcing its fleet by buying the
pressurized ships "Malvern" (3,200 cbm, built in 1990) and "Coniston"
(4,000 cbm, built in 1991), with attached charters, while Knud I Larsen took over the
"Balder Phoenix" (3,500 cbm, built in 1982) on the basis of a price of $4.5
million payable over 5 years.
Kosan was only able to dispose of the "Erik Kosan" (2,500 cbm,
built in 1978), by a sale on a bareboat basis, for a price of $1.2 million.
the light of the above brief review of the various market sectors, we see that the
shipping availability has been considerably reshuffled into a few larger controlling
owners - operators offering a wider range of ships within specific size segments and
traffic areas, and increased flexibility on given trades. A similar development was also
seen in the oil sector and other major industries with several consolidations and mergers
Whilst charterers may regret a possible lack of competition on ownership
side, the longer term impact will most likely serve the gas industry well providing owners
not to overuse their extended responsibility and positions. At the same time, owners
should remain prudent in their ordering of newbuilding tonnage in spite of recent
attractive opportunities, which are always difficult to disregard on a case by case basis
depending fleet structure considered and employment opportunity.
1998 has produced low a clear sky is still to come returns on
investments; for shipowners some results often near or below the operational costs of
their ships, and similarly below trading economics on the product side.
Considering such poor results and that the worst of the general economic
turbulence experienced during the past twelve months may have passed - one should remember
that in most Asian languages the word "crisis" also means
"opportunity" - the year ahead should only show improvements and better results,
perhaps boosted by the reality and psychological effect of the introduction of the euro.
Shipping and Shipbuilding Markets 1999
I N D E X
- Piazza Matteotti 1/3 - 16123 Genoa - ITALY
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