Better times for Epic’s FP gas ships

SWEAT THE SMALL STUFF

RESULTS • WHILE OWNERS OF LARGE GAS CARRIERS ARE SITTING ON THEIR HANDS WAITING FOR THE MARKET TO RECOVER, FULLY PRESSURISED TANKERS ARE ALREADY ON THE UP

THE MARKET FOR smaller fully pressurised LPG tankers is bucking the trend seen elsewhere in the gas shipping business. Epic Gas, one of the larger players at the smaller end of the market, reports an “encouraging period” since the middle of 2017, with market rates improving consistently.

Comparing the third quarter of 2017 with the year before, Epic says market rates for 3,500 m3 and 5,000 m3 carriers were 25 per cent higher, though those for 7,500 m3 were relatively flat and its largest ships, of some 11,000 m3 , experienced a 6 per cent decline in rates.

Nevertheless, those rates are all at the lower end of a ten-year range, which hit its lowest point through 2015 and 2016. The recent upturn in earnings for smaller vessels reflects reduced supply of tonnage in the market, following significant rates of demolition over the past four years. Indeed, Epic says that two fully pressurised and ten small semi-refrigerated ships were scrapped in the first nine months of 2017; these had an average age of 28.5 years and there are another 20 small LPG tankers of a similar age still trading.

Moreover, a lack of new contracting in recent years means that, as at the end of the third quarter, there were only eight fully pressurised LPG tankers on order, compared to an operating fleet of 327 vessels. At some

EPIC GAS IS ENJOYING FIRM DEMAND FOR ITS SMALLER

VESSELS IN THE CURRENT MARKET, PARTICULARLY EAST 2 per cent of the current fleet, that is a very low figure and much lower than for other LPG tanker segments.

WORK TO DO There is also more work for fully pressurised ships at present. Epic Gas has, for instance, had great success in the LPG break bulk business, carrying out 113 ship-to-ship (STS) transfers during the third quarter – a figure nearly three times that of the same period a year earlier. “We have seen steady growth in STS activity off West Africa, where we have almost doubled our operations compared to the previous quarter,” says Epic. Most business remains east of Suez, though, with nearly half of Epic’s STS operations being carried out off Malé or Singapore to supply demand centres such as Sri Lanka and Bangladesh, which lack the port facilities suitable for berthing larger gas ships.

Epic’s larger fully pressurised ships trading west of Suez have found market conditions tougher lately. Rising US LPG prices have cut into exports to the Mediterranean and West Africa, although the local trades to Central America remain strong. There was also the damage to infrastructure caused by Hurricane Harvey to contend with.

As a result of these market changes, while Epic Gas managed to increase revenues compared to third quarter 2016, higher operating expenses and depreciation derived from a larger fleet mean that it suffered a loss after tax of $5.7m, compared to a $5.0m loss a year earlier.

At the end of the third quarter, Epic’s LPG tanker fleet stood at 42 vessels with a total capacity of 276,400 m3. In July it acquired the 7,500-m3 Epic Boracay (2009); after the end of the quarter it sold its oldest and smallest vessel, Epic Capri (3,300 m3, 1997) at a margin over book value. HCB www.epic-gas.com