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GASPING FOR GAS GAS • THIS YEAR’S RISING LPG TANKER MARKET LOOKS SET TO CONTINUE, WITH CONFIDENT EXPECTATIONS OF FURTHER GROWTH IN LONG-HAUL GAS TRADES
Further new export capacity has come onstream in Australia and Canada, where the new AltaGas facility in British Columbia opened earlier this year; these two sources were responsible for around 0.4m tonnes of new exports in the third quarter.
WIDENING PRICE DIFFERENTIALS, the opening of new export terminals and continued appetite for LPG imports across Asia have contributed this year to a significant increase in freight rates for LPG tankers in most size ranges but most notably among very large gas carriers (VLGCs). Market analysis reported by VLGC owners suggests that there is more to come, with projected fleet growth likely to be outstripped by rising demand, at least in the near term. LPG exports in VLGCs from the US amounted to 8.5m tonnes in the third
which has provided sufficient supplies for ten cargoes per month since March 2019. VLGC operator Dorian LPG says that the US is currently exporting close to capacity. It is not just the US that has been generating new demand for VLGCs. LPG exports from the Middle East rose from 7.9m tonnes in second quarter 2019 to 8.2m tonnes in the subsequent period, despite temporary disruptions caused by refinery and tanker attacks and lower Iranian exports. VLGC operator Avance Gas expects Middle East exports to be further
BURNING FOR PROPANE The third quarter of 2019 also witnessed the emergence of some significant new sources of demand. In China, Dongguan Grand Resource & Technology conducted trial production at its new 600,000-tpa propane dehydrogenation (PDH) plant and Hengli Petrochemical started up a new single-train PDH unit. SP Chemical brought a new steam cracker onstream, using both ethane and propane as feedstock. Given the current trade battle between the US and China, these new plants are currently using LPG sourced from the Middle East. Meanwhile, in South Korea, both Hanwha Total and LG Chem brought steam crackers
quarter of 2019, up from 7.0m tonnes in the same period a year earlier. That equates to 59 cargoes per month for the latest period, compared to 51 per month in first quarter 2019, with much of the increase resulting from the opening of the Marine East II pipeline to Marcus Hook on the east coast,
constrained over the winter due to refinery maintenance outages and higher domestic consumption. This should result in additional tonne-mile demand for VLGCs, with some product moving into Asia – although not to China – from the US instead of the Middle East.
back online after maintenance, during which both were expanded and will be using more propane feedstock. Not only did all this activity increase demand for LPG, but during the third quarter the price spread between the US and Far East widened, allowing an increase in freight rates.
HCB MONTHLY | DECEMBER 2019
