Spot rates exceed time charters on port delays
Port delays in northern Europe and North Africa have prevented liquefied petroleum gas carriers from discharging and loading cargoes, giving owners of vessels available for European coastal work confidence to raise spot rates to a two-month high.
Congestion in Moroccan discharge ports with berthing delays of up to six days stopped gas carriers from returning to northwest Europe, while strikes in Le Havre, France, and delays in Terneuzen, Belgium, delayed vessel operations.
These delays left just four gas carriers of 2,000 cu m-4,000 cu m capacity available ? out of the global fleet of 260 vessels ? for immediate butane and propane shipments in northwest Europe.
?All these delays are having an impact on the market. Waiting times can easily be a couple of days to a short week ? between two and six days,? a broker with Norway"s Joachim Grieg & Co said.
?With a shortness of tonnage in northwest Europe right now, the spot market rate is much stronger than even the 12-month time charters. We have seen a 3,500 cu m ship earning $300,000 per month on the current spot market. The 12-month rates are $210,000-$220,000 per month,? he added.
The freight rate for 3,500 cu m LPG carriers shipping 1,800 tonnes of butane on the benchmark route of Teesside to Amsterdam-Rotterdam-Antwerp rose from $38 per tonne two weeks ago to $42 per tonne, the highest since February 10. This is an equivalent rise in daily spot rates from $8,500 to $9,900 per day yesterday.
Norwegian and London brokers expect rates will continue to climb throughout this week if port delays continue.
The Morocco delays led to the rate for LPG carriers of 5,000 cu m shipping larger 3,000-tonne ARA cargoes to Portugal to rise to $70 per tonne, up from $65 per tonne at the start of this month, said a Norwegian broker.
The Joachim broker said the charter of gas carriers that usually operate in the European coastal trade for longer haul voyages also helped reduce the number of available ships in Europe. Last week, Swiss trader Geogas fixed the 2002-built, 7,500 cu m Super League to ship butane from Lavera, France, to Dakar, Senegal, at an undisclosed rate.
Meanwhile, the number of very large gas carriers ? more than 60,000 cu m capacity ? trading in the Atlantic region has fallen to ?record low levels? as traders fixed VLGCs to ship LPG to Asia, a Norwegian broker said.
One of these was the 2008-built, 73,517 cu m Ronald N , fixed by Shell at a freight rate of $69 per tonne to ship 33,000 tonnes of LPG from Houston to an unnamed Asian destination, loading from April 20-25.
?There are record low numbers of VLGCs trading west of Suez ? there are 23 trading against normal levels of 30-35. There has been more arbitrage trade going West to East. In the last two months, we have seen quite a lot of West Africa cargoes going to Japan and occasionally a Houston to East cargo,? a Lorentzen & Stemoco broker said.
Spot freight rates for VLGCs trading in the Atlantic were around $10,000 per day last week, down from $12,000 per day at the start of this month.