Dorian LPG Ltd. said global seaborne supplies of liquefied petroleum gas increased in the three months ended June 30, driven by a surge in exports from the U.S.
On the market:
“Global seaborne LPG supply increased an estimated 1.5 million tons during the second calendar quarter of 2021 compared to the first calendar quarter of 2021 and a 6% increase from the same period of 2020,” the liquefied petroleum gas shipping company said.
“The majority of this increase was from the U.S. where exports reached an average of 4.4 million tons per month in the second calendar quarter of 2021. Middle Eastern LPG seaborne supply remained relatively constant with production cuts and Iranian Sanctions remaining in place.
“Crude oil prices rose throughout the second calendar quarter of 2021 with Brent averaging approximately $69 per barrel, compared to $32 per barrel during the same period in 2020. Flat prices of propane and butane consequently rose, however, the percentage of propane and butane compared to crude oil dropped from the previous quarter across all major regions.
“With higher seaborne supply, imports into the major consuming regions rose particularly to China, where LPG imports increased from around 5.7 million tons during the first calendar quarter of 2021 to 6.5 million tons during the second calendar quarter of 2021.”
“Petrochemical margins increased throughout the first calendar quarter of 2021 and this trend continued into the second calendar quarter of 2021 as a number of facilities did not return to full operation after being shut in the first quarter. This was most noticeable in the western hemisphere.
“Consumption of LPG as a feedstock for petrochemicals increased in the second calendar quarter of 2021 compared to the first quarter with propane favored as a feedstock for the production of ethylene over naphtha.
“The propane-naphtha spread in north-western Europe widened to -$90 per ton on average in the second calendar quarter of 2021, compared to an average of -$23 per ton during the first quarter.
“Towards the end of the second quarter, however, margins for the production of ethylene via steam cracking started to decline, with the largest declines in the eastern hemisphere.
“The Baltic VLGC index averaged around $53 per ton in the second calendar quarter of 2021, only $2 per ton below the performance of the Baltic Index as of the first calendar quarter of 2021.
“Currently, the VLGC orderbook stands at approximately 22% of the current global fleet. An additional 70 VLGCs, equivalent to roughly 6.2 million cbm of carrying capacity, are expected to be added to the global fleet by calendar year-end 2023. The average age of the global fleet is now approximately 10 years old.”
Source: Dow Jones