Freight prospects for the small vessel segment in the LPG (liquefied petroleum gas) shipping market are expected to be the best in 2018, while Handysize vessels will be the worst.
This according to global shipping consultancy Drewry’s latest edition of the LPG Forecaster, released yesterday (Monday).
Drewry senior analyst for gas shipping, Shresth Sharma, noted that fleet growth was the main catalyst for LPG vessels’ freight rate outlook and the market was currently oversupplied with vessels.
He pointed out that the global LPG fleet had expanded at an annual average rate of 17% in 2015 and 2016, and was expected to grow by 9% in 2017.
“Moreover, the Olefin gases trade will not be strong enough to keep all Handysize vessels employed,” said Sharma. “By contrast, fleet growth in the small LPG vessel category will be negative on the back of a thin order book and expected demolitions, which will support freight rates for this segment.”
He added that estimates showed that the small LPG segment would return the investment in eight years, while it would take 19 years to do so in the Handysize segment.
