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Q&A: BW LPG tightens focus amid LPG upheaval and risk
Q&A: BW LPG tightens focus amid LPG upheaval and risk
London, 2 September (Argus) — The VLGC market has been hit by multiple operational challenges stemming first from the US-China trade war and then the Iran war, both compounded by capacity constraints at the Panama Canal. But they have boosted freight rates to new highs and allowed VLGC owners, including the world's largest, Singapore-based BW LPG, to post bumper second-quarter profits. Argus spoke with BW LPG chief executive Kristian Sorensen on the challenges and opportunities ahead: How could the Hormuz crisis reshape LPG trade patterns and VLGC deployment? With Middle Eastern LPG exports choked, it is all about US-Asia trade. US exports are not re-placing the shortfall from the Middle East, but higher US flows and longer-haul trading patterns are absorbing substantial shipping capacity, which is driving freight rates up. There has also been a higher-than-expected number of VLGCs controlled by Middle Eastern and southeast Asian interests in the Indian Ocean waiting for the strait of Hormuz to reopen. It is quite likely that countries in southeast Asia and India will source more of their LPG imports from the US. Do you expect US LPG exports to retain their larger share of Asian demand once Hormuz conditions normalise? Markets east of Suez have been the main outlet for US LPG exports for several years and I can't see this changing soon. European and Latin American markets are not large enough to consume the massive US volumes, while the Asian market has the size and the energy mix that fit well with LPG. This goes hand-in-hand with highly dynamic US LPG pricing supporting the competitiveness of US cargoes and allowing supplies to penetrate new markets, including India and east Africa. Given the constraints at the Panama Canal , will it remain the dominant route for US exports, and is the LPG pipeline project necessary for future growth? The Panama Canal's capacity is more or less fixed for this decade. We see it as a bottleneck, with increased competition for transit slots from several shipping segments, driven by substantial newbuild orderbooks, including a growing fleet of VLGCs. As VLGCs are not prioritised at the canal, we believe it is inevitable that more will sail around the Cape of Good Hope be-tween Asia and the US due to congestion and if they sail to India and southeast Asia. How the Panama pipeline dynamics play out remain to be seen, as shipping logistics on both sides of the canal will become more complex. If India, southeast Asia and east Africa continue to in-crease their share of US exports, the canal becomes relatively less important. BW LPG recently ordered eight Panamax-capable VLGCs that can transit the smaller Panama Canal locks. What benefits will these bring? The 90,000m³ dual-fuel VLGC Panamax design is optimal in terms of size, fuel efficiency and trading flexibility. Historically, Panamaxes were smaller than the conventional VLGCs, but these vessels have erased that disadvantage. This means they are more flexible than conventional VLGCs when trading through the Panama Canal, while they are similarly competitive on non-Panama long-haul trades. The VLGC newbuild orderbook is sizeable at about 155 out to 2030. What gives you confidence that long-term LPG trade growth can absorb this? The underlying appeal of LPG as a commodity is still promising. It is unique in the sense of being a versatile by-product of crude and natural gas production, meaning over time it will al-ways be priced competitively on international markets. The dislocation between LPG production and consumption is very shipping-intensive, and we believe it will remain so in the future. There will also be a need to replace older and less-efficient vessels, as about 15pc of the glob-al VLGC fleet is older than 20 years. But there is obviously a limit to how many ships are needed and shipping markets are well known for boom-and-bust cycles. So we continue to actively manage risk and exposure while renewing our fleet opportunistically. Will the propane dehydrogenation (PDH) sector continue to drive China's LPG trade growth in the coming years or will other uses become more important? Assuming a normalisation in the markets and in US-China trade relations, we believe there is still room for growth in Chinese LPG demand. As mentioned, LPG can penetrate and develop new markets thanks to its competitive pricing and versatility. Whether it is the PDH sector or other markets driving Chinese demand 5-10 years from now is difficult to assess since the use of LPG historically has shifted between various industries and sectors. But the petrochemical industry is likely to be a significant consumer of LPG in the next decade. Is BW LPG interested in moving into the growing ethane or ammonia segments? Never say never, but our business model is as a pure-play VLGC and LPG trading set-up. This model is important for our investors to ensure transparency and provide the cleanest exposure to the most attractive LPG markets. We currently don't have any ships trading ammonia, but we have many years of experience from shipping it when we owned smaller LPG ships, and it is likely that ammonia trade will expand in the future. So we are not strangers to the ammonia market if something develops for VLACs [very large ammonia carriers]. For now, it appears the pace of the market's development is slower and less certain than we forecast. How do you view current regulatory and geopolitical risks for shipping firms? Given how the world has evolved during the past few years, geopolitical uncertainty is the overshadowing risk factor. We went through the phases of the US tariff war and regulatory challenges in 2025 , but this has dropped off the radar due to the escalating Middle East situation. When it comes to environmental and emissions regulations, we are quite fortunate in the LPG shipping space as the dual-fuel LPG propulsion technology has been embraced as the industry standard, combining 15-20pc lower CO2 emissions with significant marine fuel cost savings. Why did BW LPG exit its planned investment in Indian LPG infrastructure earlier this year, and does it signify a shift in strategy away from vertical integration? The planned Indian terminal investment was small compared with our balance sheet. As things evolved, and VLGC and LPG market complexity and risk increased, we realised that the time, efforts and resources we allocated to a relatively small project were disproportionate to the expected return. The main value creators for our shareholders lie within our shipping and trading activities, and as market volatility increased on the back of unpredictable geopolitics, it was increasingly important for us to redirect our focus to our value-creating business. What is the biggest risk to the VLGC sector that the market is underestimating? It is becoming speed blind and unrealistic in your market outlook. Shipping will remain a cyclical business and managing the market exposure will remain a key factor for success in the future. Every ice cream seller makes good money on a sunny day — the real test comes when the market turns. For LPG commodity markets, low oil and natural gas prices are bad for the exploration and production of LPG. But over time, I am not too worried about that as I believe population and prosperity growth require a lot more energy than previously expected, and LPG fits very well into that story. Send comments and request more information at feedback@argusmedia.com Copyright © 2026. Argus Media group . All rights reserved.
Stretched global LPG logistics hit by more Panama cuts
Stretched global LPG logistics hit by more Panama cuts
Trade flows could be rerouted again as waiting times and costs at the Panama Canal are set to rise further London, 2 September (Argus) — Panama Canal operator ACP is to cut daily auctioned transit slots this month because of falling water levels, tightening capacity further and adding to congestion that has already lifted Neopanamax auction costs to multi-year highs. Under changes effective from 21 August for transit bookings from 4 September, ACP will offer nine daily slots through the larger Neopanamax locks that typical VLGCs use, down from the usual allocation of 10. This follows a lack of rainfall for the canal's fresh water lakes. Rainfall was 34pc below average in May-August and water inflows 44pc lower, ACP says. The operator warns that a severe 2026-27 El Nino could further reduce rainfall over the rest of its rainy season, which runs from May-December. Reduced slot availability will increase competition for transits, potentially raising freight costs or prompting vessels to divert around the Cape of Good Hope. Argus assessed the Neopanamax auction price at $3.1mn on 27 August, its highest in recent years, before easing to $2.15mn on 1 September. One shipowner in late August paid $5.3mn for a northbound Neopanamax slot on 1 September. Waiting times for auctioned southbound Neopanamax transits had increased to 21 days by 25 August. US propane and butane prices diverged sharply after the new restrictions were announced, as longer or costlier Asia-bound voyages weighed on an oversupplied US propane market while stronger gasoline blending demand supported butane. Mont Belvieu EPC butane prices moved to nearly a $147/t premium to equivalent propane values by 31 August — the widest premium for the heavier grade since 19 May. US propane inventories remain about a third above the five-year average and climbed to a record high of 109.5mn bl (8.8mn t) during the week to 21 August, the latest data from the Energy Information Administration show. The market is accordingly weak, lagging crude benchmarks despite brisk exports to Asia. The prospect of further Panama Canal delays has added to bearish sentiment because it could make it harder for surplus US supply to clear into this key outlet. The US propane market reaction was contrasted by gains on the Argus Far East Index (AFEI) for northeast Asian deliveries on the same day, as the canal restrictions heightened concerns of tighter supply and higher freight costs. The US-Asia paper arbitrage for September subsequently widened to $385/t by 28 August, although the October spread narrowed to $361.50/t on 1 September. But a strong arbitrage does not negate the logistical constraints. Higher transit costs, fewer auction slots and longer waiting times could still restrict Asia-bound shipments on the canal, pushing them to take longer voyages. The canal disruptions could also steer more US LPG to northwest Europe, as exporters seek logistically quicker and simpler outlets. But US LPG arrivals to the region are already elevated, climbing to a nine-month high of 621,000t in August, one-third above the average of the previous five months, according to Kpler data. Europe may be able to absorb some additional supply because North Sea maintenance is trimming regional output. But demand has strengthened only marginally since the summer lull, and northwest European propane pricing has largely moved in line with the broader energy market, indicating that the region remains well supplied. Send comments and request more information at feedback@argusmedia.com Copyright © 2026. Argus Media group . All rights reserved.
Ethylene surplus weighs on naphtha demand
Ethylene surplus weighs on naphtha demand
London, 2 September (Argus) — European naphtha demand from the petrochemical sector is unlikely to rebound sharply despite improved Rhine logistics, as an oversupplied ethylene market continues to weigh on steam cracker operating rates. European cracker utilisation fell to 65-70pc in August, according to petrochemical market participants, as weak demand across the olefins chain reduced incentives to raise rates. August is typically slower because plastics converters shut units seasonally, but participants described this year's demand as particularly weak. Lower cracker runs have done little to tighten ethylene balances. The European market remains long despite logistical disruptions along the Rhine that limited feedstock deliveries to some inland crackers , as crackers were also unable to deliver finished products out, participants said. Coastal crackers, which have more LPG flexibility, were less affected compared with inland plants along the Rhine that run higher naphtha configurations. LPG margins are more attractive , while ethane-fed producers still benefit from lower feedstock costs, participants said. Ethylene demand strengthened earlier this year on expectations that disruption to Middle East olefin exports could tighten global supply, but those concerns have faded. Trade flows adjusted and supply remained available , participants said. Some seasonal improvement is expected in September as converters return from summer shutdowns, but there is little sign of a broader rebound in consumption. Quarter-end inventory targets could also discourage restocking later this month, participants said. A rise in Rhine water levels over the past two weeks has eased constraints on naphtha barge movements to inland European markets. But the respite may prove short-lived, with water levels forecast to fall again in the coming days. Water levels at the Kaub chokepoint on the Rhine breached 70cm over the weekend, but are set to fall back to 40cm by the end of the week. Naphtha cracking margins have stabilised from early-summer lows of around a $19-12/t discount to North Sea dated to about a $4/t discount, but remain weaker than for alternative feedstocks. Support for naphtha has instead come from the gasoline sector . Strong blending economics drew down blending-grade naphtha inventories that built during the Rhine disruption, providing an outlet for surplus barrels , participants said. By Jide Tijani Send comments and request more information at feedback@argusmedia.com Copyright © 2026. Argus Media group . All rights reserved.
Talks can resume when US ‘starts being serious’: Carney
Talks can resume when US ‘starts being serious’: Carney
Calgary, 1 September (Argus) — Canada is prepared to resume trade talks with the US but is not inclined to do so until its southern neighbor's strategy becomes more constructive, prime minister Mark Carney said today. "When the Americans stop doing memes, stop throwing shade, stop trying to be tough, and start being serious about having those discussions, we can have those discussions," said Carney in Ottawa on Tuesday. The US on 22 August imposed new tariffs on $28bn of Canadian imports using Section 338 of the Tariff Act of 1930 after trade talks between the two countries broke down the evening before. Canada has vowed to retaliate "dollar for dollar" starting on 8 September. US president Donald Trump on 24 August called Canada "among the worst Nations in the World to deal with" before renaming Lake Ontario to Lake America days later. Carney said negotiations were derailed by unreasonable US demands, suggesting they would have put Canada's sovereignty at risk. Carney's comments came the day after his party and trade strategy got a boost from voters who elected three Liberal candidates in special elections to regain the party's majority position. The governing Liberals now hold 173 of the 343 seats in the House of Commons, allowing the passage of legislation without support from any of the other parties. The Conservatives remain the official opposition with 138 seats. The special elections were held to replace members of parliament who had resigned from their posts between general elections, which had temporarily reduced the Liberals' to slightly below majority status. Byelections were held in Quebec, Ontario and British Columbia, the three provinces hit the hardest by punitive US tariffs on Canadian goods. The US' latest trade action has nearly tripled the estimated effective tariff rate on imports from British Columbia to about 11pc, while roughly doubling the rate on imports from Quebec and Ontario to about 11pc and 8pc, respectively, according to ATB Financial. About 52pc of Canadians said they are "personally willing to undergo some significant economic pain" to help the rest of Canada amid the trade battle, according to a recent Ipsos poll. About 73pc of those polled support imposing an export tariff on crude oil, natural gas and electricity, while 69pc support limiting energy exports to the US altogether. Because of tariff exemptions by Trump on energy imports, Alberta and Saskatchewan have been relatively unscathed and have both advocated diplomacy over retaliation. By Brett Holmes Send comments and request more information at feedback@argusmedia.com Copyright © 2026. Argus Media group . All rights reserved.
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Rhine crisis hits European LPG logistics
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Middle East Crude Flows, Iran Shipping Attacks & Energy Risks
Strait of Hormuz: Geopolitical Risk, Oil Supply, and Crude Market Outlook
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