LPG shipping costs to rise 50% by 2003
Costs of chartering liquefied petroleum gas carriers are expected to rise 50% from 1997 levels by 2002-03.
This is the prediction of Drewry Shipping Consultants Ltd., London, which said that worldwide LPG consumption reached 166 million metric tons in 1996, of which one third was traded across international boundaries.
"Over the past 5 years," said Drewry, "LPG production has grown at an average rate of 4.4%/year, while LPG imports have increased by 6%/year.
"The growth in trade has not been paralleled by increased demand for LPG carriers, as much of the new production has been close to consuming markets. Seaborne trade currently represents 25% of worldwide LPG production."
The analyst reckons seaborne trade in LPG will increase by an average 3.9%/year to 2005, to reach 51.1 million tons in 2000 and 61.4 million tons in 2005.
Drewry attributes anticipated increases in chartering rates to sustained trade growth and restrained ordering of new LPG carriers. LPG fleet capacity totaled 12 million cu m in 1997.
The analyst said freight rates for LPG carriers will have to rise in line with its forecast in order to justify investment in newbuilding at current prices.
LPG carriers of more than 70,000 cu m capacity are expected to see time charter rates rise from an average of $585,000/month in 1996 to a peak of $975,000/month in 2002.
After this, charter rates are expected to fall sharply as new LPG carriers are ordered by operators, with a 70,000 cu m-plus vessel expected to charter at $750,000/month in 2005.
"With exports of 25 million tons in 1996," said Drewry, "the Middle East dominates LPG trade, and Saudi Arabia accounts for more than 15 million tons of the total, much of which is sold under term contracts into Asia.
"The 12.2% growth in Western European exports in the 1990s has been underpinned by the North Sea, but the 11.3 million-ton total from 1996 represents mainly intraregional and overland movements.
"The increase of 1 million tons in Asian exports since 1990 to 4.6 million tons in 1996 is centered on short-haul trades. Africa exported just 4 million tons in 1996, Algeria representing 3.5 million tons, but the region is the second largest in terms of interregional exports after the Middle East.
"Japan is the largest seaborne importer of LPG, with 15.4 million tons of seaborne deliveries in 1996, but imports from 1990 to 1996 grew at an annual average rate of just 0.8%."
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