Singapore — Very Large Gas Carrier freight rates on the Persian Gulf to Japan voyage surged to the highest level in more than nine months Nov. 26 at $73/mt, underpinned by strong shipping and LPG demand from China, Japan and South Korea during the winter seasonal peak, S&P Global Platts data showed.
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In addition, tonnage supply has been moderated by heavy dry dock schedules, a Singapore-based market source said.
"Freight rates [are] going up because of more shipping demand, and also more ships [are] going into dry dock," the source said.
An estimated 31 VLGC vessels are in dry dock in the fourth quarter, according to data from shipping service provider Clarksons Platou.
The VLGC freight rate on the Persian Gulf to Japan route was last assessed higher at $73.50/mt on Feb. 11, Platts data showed.
Spot VLGC freight rates month-to-date averaged at $63.47/mt, up from the $60.02/mt average in October and $54.34/mt average in September, Platts data showed.
VLGC rates typically peak in the fourth quarter, driven by strong seasonal LPG demand for winter heating in North Asia. In November 2019, VLGC freight rates averaged at $75.45/mt.
BW LPG, in its third quarter financial results released Nov. 13, said it is optimistic about the VLGC market for the rest of the year.
"The VLGC freight market is strong and is supported by resilient LPG exports out of the US, recovery in LPG exports from the Middle East, and a widening arbitrage driven by strong demand and reduced fleet availability," the Singapore-based company said in its Q3 results.
VLGC freight rates out of the US Gulf Coast also rose to a 10-month high on Nov. 25, on the back of tight availability amid Panama Canal delays, Platts reported earlier. The Houston-Japan freight rate was assessed at $135/mt, while the freight to Europe was assessed at $70/mt. The US market is closed Nov. 26 for the Thanksgiving holiday.