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Small, older LPG vessels facing declining rates: Epic Gas

Small, older LPG vessels facing declining rates: Epic Gas
The pressurised LPG shipping market is continuing to “bounce along the bottom” amid an oversupply of tonnage and a further sliding of rates for smaller and older ships in the past 12 months, according to Epic Gas.

While the market has remained relatively stable during the first quarter this year, Epic Gas observed that the 12-month rolling average for freight rates had dropped off about 15% from the end of the first quarter of 2015 for smaller vessels, but larger vessels have held broadly stable.

For the first quarter this year, rates for 3,500 cu m, 5,000 cu m and 7,500 cu m capacity ships have averaged $5,562, $7,151 and $11,192 per day, respectively.

“The lower returns in the market combined with limited yard and tank manufacturing capacity have led to just two 7,500 cu m newbuild orders placed during the period [first quarter] for delivery ex Japan in 2018.

“As of 31 March 2016, the orderbook for pressurised vessels is correcting downwards, and stood at 18 ships and 144,200 cu m of capacity, representing a modest 9% of the existing global fleet by cubic,” Epic Gas said.

On the other hand, five vessels representing 34,600 cu m were delivered during the first quarter, while one unit of 4,000 cu m was scrapped.

For Epic Gas, the company took delivery of two of its eight newbuildings in February and March, namely the 7,500-cu m Epic Borinquen and the 11,000-cu m Epic Sentosa.

The Singapore-based company, meanwhile, announced a first quarter net loss of $1.4m compared to a wider loss of $2.4m in the same period of 2015. Revenue came up to $32.2m, down slightly from $33.4m in the year-ago period.