Solvang up on improved gas marketsSolvang up on improved gas markets

Despite an increase in bunker costs and an unfavourable exchange rate, Solvang's Q4 earnings jumped to NOK19.8m ($3.5m) from NOK14m for the same period in 2011. Full year earnings before tax in 2012 were NOK64.1m, a substantial improvement on 2011's NOK14.2m.

Strong earnings in the second and third quarters, on the back of increased LPG demand from Asia, outbalanced the weaker market in the fourth quarter caused by maintenance in Qatar and increased domestic usage in Saudi Arabia. Strong output from the Arabian Gulf in the first half of the year, before Qatar's maintenance shutdown, will be comfort for the gas carrier as its VLGC fleet will be boosted from one to three in 2013 as it takes delivery of two 84,000 cu m vessels from Hyundai Heavy Industries in Korea.

Solvang's pair of panamax gas carriers played size to their advantage, outperforming the fleet's largest ships with higher rates.

A further step down in size sees another step up in performance as the six strong 60,000 cu m fleet of LGCs pulled in 40% higher time charter equivalent earnings in 2012 compared with 2011. A 30% drop in gas exports from Trinidad was good news for the ammonia carriers as the LGCs took up the slack on the Black Sea to USA route, where supply and demand are tight, a situation that looks set to continue into 2013.

Even the 12,000 - 17,000 cu m ethylene carriers ended the year on a high note. Despite a weak start to the year, improvements in the spot market and increased output from suppliers to fulfil demand previously met by Iran left the sector shy of 2011's earning, but in a better position than forecast at the beginning of the year. The company does have concerns for the long term in the ethylene sector as a large orderbook looks ready to upset the supply and demand balance.