Last week, the large commercial market closed with gains of LPG transporters. The so-called VLGC gained 21% more than a week ago, managing to close the gap in gains since the end of August. However, they remain 48% lower.
Analysts say Very Large Gas Carriers (VLGCs) have benefited from inefficiencies caused by the drought – and, to a lesser extent, the Red Sea crisis – with longer journeys increasing tonne-kilometres.
This helped absorb some of the new construction capacity ships which reached the water in 2023, a time when the fleet grew by 12%.
However, the VLGC transits the Panama Canal has increased significantly in recent months as conditions have improved and restrictions have been lifted.
Furthermore, lower prices for naphtha – a petrochemical raw material that competes with propane – are believed to have reduced demand for freight earlier this month, contributing to a drop in rates until September.
The course of prices
“The U.S. propane price is $230 per ton below Europe and $310 per ton below Asia,” notes Jefferies and adds:
“The freight rate today on the US Gulf – Europe route is close to US$50 per ton and on the US – Asia route it is around US$90 per ton.
These amounts represent just 20%-30% of these regional gas price differences, compared to their long-term average (in 2015) of 65%-70%. On long-term averages, VLGC profits would be more than $100,000 per day.”
According to Jefferies, the VLGC fleet grew 12% in 2023, but new ship additions will moderate in 2024 and 2025 to 6% and 5.5%, respectively.
“Right now, and in the short term, we see a relatively stable market”, say the analysts, although they characterize it as “balanced” in the medium term.
Dorian
The course of the market in VLGCs is reflected in the financial results as well as the dividends that Dorian LPG gives to its shareholders.
Yannis Hatzipateras, which manages a fleet of 25 VLGCs, has decided to pay another extraordinary cash dividend of $1 per common share, returning $42.6 million in capital to shareholders.
Dorian LPG is a leading owner and operator of modern large vessels (“VLGCs”) that transport liquefied gas around the world.
The company, at the beginning of the year, confirmed the first order for an ammonia transporter, which will be delivered in the third quarter of 2026. It is a 93 thousand cubic meter vessel.
The company’s president and CEO, Yiannis Hadjipateras, stated that the company is investing in this type of vessel as it believes in the long-term fundamentals of the LPG market and the possibilities of transporting ammonia.
Mr Hadjipateras
Hadjipatera, “During the quarter ended June 30, 2024, we paid dividends to our shareholders based on strong earnings and cash flow generation and completed an important strategic objective with a successful share offering that positions us well for the future development and renewal of our fleet.
Demand for LPG remains strong, as its availability, economic efficiency and environmental footprint make it the fuel of choice for many applications. As always, I recognize our dedicated seafarers and shore personnel whose hard work and dedication make our results possible.”
It should be noted that the company’s net profit reached 51.3 million dollars in the second quarter, compared to 51.7 million dollars in the corresponding period last year.
Average charter time per day was $55,228 for the three months ending June 30, 2024, an 8% increase from $51,156 for the same period last year.
Total fleet utilization (including utilization of ships deployed in the Helios Pool) decreased from 98% during the second quarter of 2023 to 90.4% during the quarter ending June 30, 2024.
The financial numbers
The company’s revenue ultimately was $114.4 million for the three months ended June 30, 2024, an increase of $2.8 million, or 2.5%, from $111.6 million from the corresponding period last year, mainly due to an increase in fleet size. which was partially offset by a decrease in fleet utilization.
Available days increased from 2,219 in the second quarter ending June 30, 2023 to 2,275 in the corresponding quarter of 2024.
It should be noted that the company has a market capitalization, on the New York Stock Exchange (NYSE), of 1.45 billion dollars, while, according to Investing.com, the total value of the company’s assets amounts to 1. 91 billion dollars at the end of June 2024. , while total liabilities are 790 million dollars.
