The consolidation of tonnage and the general recovery
of the petrochemical industry, where the majority of this segment is
mainly dedicated, generated a substantial strengthening of freight
rates, badly needed by a few owners after two years of poor results.
Thanks to a shortage of products in most industrial
areas (mainly Europe) and the availability of competitive product from
Asia, long-haul ethylene voyages from South East Asia and Korea to West
options were possible, and propylene movements from the USA and South
America to Europe became more regular. Such longer trips put some
pressure on ship's availability.
Butadiene / C4 transatlantic moved up to $130 per mt
by the third quarter and then fell slightly over the last quarter. The
ethylene market was as usual affected by the product demand created by
plant outages and scheduled turnarounds in Europe.
Some signs of slowing down were however observed
during the fourth quarter, when increased idle times and prompt
availability of tonnage arose.
One should also note the Navigator 22,000 cbm ships
delivered during 2000 have now all finished their trading on LPG
short-term time charters in the East and West of Suez, with the
exception of a single ethylene trip from South East Asia to Europe.
10 ships were reported ordered in this sector, among
- four ethylene carriers 8,200 / 8,400 cbm at Chinese yard by
- one 8,600 cbm semi-ref type ex-Japanese yard by Japanese owners,
- two ethylene 9,000 cbm ex-Italian yard by Italian owners,
- one fully-ref 22,000 cbm ex-Korea, and
- two semi-ref 22,500 cbm ex-Japan by Naftomar.
5,600 cum, blt 1999 by Kodja Bahari - Owned by Gaschem Pool, Hamburg
Although not as affected by concentration as the
larger tonnage categories, this segment was fairly active, and a firm
upward trend was observed until September. Depending on vessel size and
specifications, the average increase of freight earnings can be assessed
at around 20 % over last year earnings, 15 % for small pressure-type
vessels and up to 30 % for some large semi-ref type ships.
Petrochemical activity represented a good share in
this upturn, with additional production coming from Asia at competitive
prices and shortage of products in Europe. However, despite the advent
of winter months in the Northern hemisphere, signs of stability or even
a weakening appeared as from mid September, due to :
- LPG prices reaching uncompetitive levels to be used as feedstock.,
- abnormally warm temperatures for the season,
- slowdown of demand for petrochemical products.
Considering that we seem to be entering a late mild
winter and that the shipping market is not far from being balanced, it
might take very little to see a possible reverse trend.
As stated before, the newbuilding activity has been
rather limited in this segment except for several 4,100 to 7,500 cbm
pressure-type vessels contracted by Japanese owners and fixed to LPG
traders on long-term time charter periods, mostly intended to trade in
At the dawn of year 2001, with some signs of
weakening in demand and product prices and the slowdown in the U.S.
growth and its possible side effects, we dare to say that the gas
industry as a whole, both on the producer and perhaps more on the
shipowning side, has shown clear signs of wisdom over these past twelve
months ! Why ?
Despite a high degree of volatility, most players
have been very cautious in taking new positions or starting new
investments, always attempting not to disrupt too quickly the overall
balance of the markets.
We have seen some commodities prices going up by more
than 200 % whilst the main freight increases have, on average, hardly
risen over 35%. This clearly shows that the upturn of the market
was, in general, more beneficial to the product than to the ship in
terms of earnings.
Compared to the levels recently achieved on the oil
tanker market, where increases sometimes exceeding 500 % occurred within
a much wider and less consolidated market, there are some reasons to be
satisfied with the proportionally more limited variations observed in
the LPG markets !
Growing too fast may mean problems for the year
ahead. Obviously such an attitude does not mean that owners refuse to
make higher profits, but may be attributed to a more reasoned
calculation between huge immediate profits as against lower but steady
Limited scrapping, often due to ongoing debts still
outstanding on older tonnage, and a controlled pace for new building
have also contributed to avoid an excess of over-capacity of tonnage.
Considering the high degree of concentration of the
fleet and industry mergers which came into effect last year, and its
limited impact observed in 2000, we have every reason to believe that
the LPG industry is moving in a mature and sound direction.
Let it be the same venue for 2001 !
6,500 cum prs, blt 1995 by Asakawa - Owned by Marathon Shipping,
on long term charter to Naftomar Shipping and Trading, Athens
The LPG carriers second-hand market
The only sale reported in this category during the
year was the 'World Rainbow' 70,000 cbm 1971-built, sold to Naftomar
at auction in Korea for US$ 2.6 million.
- Large LPG carriers between 50,000 and 70,000 cbm
The disposal of the Pemex fleet was completed this
year in July with the sale of the 'Cantarell' 57,000 cbm 1980-built
to the joint venture between General Ore and Solvang. It is interesting
to point out that it was necessary for the sellers to organise several
consecutive auctions (with at each time a reduced reserve price) before
finally succeeding to sell the ship at US$ 9 million. Last year
comparable units from the same fleet were able to obtain US$ 15 and 11
- 20,000 to 50,000 cbm carriers
Under the same conditions as described above, Pemex
sold to the joint venture between Ultragas (Chili) and Solvang the 'Nuevo
Laredo' 22,000 cbm 1978-built for US$ 6 million. Another possibility
in this segment was illustrated by the decision taken by Spic (India) to
quit the LPG market and to propose the 'Spic Diamond' 22,500 cbm
1991-built for sale at the beginning of the year. Once again Naftomar
grabbed this opportunity and obtained the vessel at US$ 21.5 million.
- 12,000 to 20,000 cbm carriers
Due to the fact that there is no real seller in this
category, the result is the same one as the year before, with no sale
- 3,000 to 12,000 cbm carriers
Contrary to last year, the second-hand pressurised
tanker market did not see many sales, however semi-refrigerated and in
particular recent ethylene carriers were able to benefit from improved
market condition to change hands.
For example, at the beginning of the year Gaz
Atlantique (France) succeeded in taking control of the 'Tarquin Glen'
and 'Tarquin Grove' (same owners) 3,200 cbm 1991 and 1992-built, for
close to US$ 18 million en bloc. A few months later, the same sellers
parted with the ethylene carrier 'Tarquin Navigator' and 'Tarquin
Rover' 7,000 cbm 1995-built for US$ 35 million en bloc passing to the
control of Antony Veder.
At the same time Naftomar was selling for US$ 17.5
million their 7,500 cbm ethylene carrier 1994-built 'Pugliola' to
Othelo International, who continued the charter party attached to the
At the end of the year Agip sold to other Italian
owners the 'Agip Sardegna' 4,000 cbm 1992-built ethylene carrier
with the 'Agip Syracusa' 3,000 cbm 1983-built pressurised type at a
reported price of US$ 14.5 millions en bloc .
There are still a few potential sale candidates on
the market which are all close to or in excess of 20 years old. We may
wonder whether any of these will attract potential buyers in the future,
as 'age' becomes more and more a sensitive subject.
Shipping and Shipbuilding Markets in 2000
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