The Tees to ARA coaster freight rate has fallen to near 10-month lows, driven lower by a lack of cargo demand in northwest Europe and a growing tonnage list.
The 1,800t Tees-ARA coaster assessment closed at $49/t on 6 October, its lowest since it traded at the same mark on 15 December 2021. The 4,000t Tees-Mohammedia assessment traded at $79/t on 6 October, just 50¢/t lower than a month earlier.
Record high US imports helped to keep European stocks plentiful throughout the summer, but that activity has now started to soften. But these flows have offset the reductions in local supply as the deep negative spread between propane and natural gas motivates refiners to consume LPG as fuel and gas producers leave it in natural gas streams.
The continued burn of LPG as fuel has meant fewer cargoes requiring shipment in Europe, weighing on spot freight rates. The Tees-ARA coaster rate traded $8.75/t lower than a month earlier on 6 October.
As testament to the lack of cargo available in Europe, at least three LPG fixtures have been made out of the US Gulf during the week, with vessels carrying LPG cargoes on coasters into European ports.
Additionally, strike action at several refineries in northern Europe have further weighed on output. Strikes continue in France at ExxonMobil's 133,000 b/d Fos refinery and its 236,000 b/d Port Jerome unit. TotalEnergies' 246,900 b/d Gonfreville plant and its 109,300 b/d Feyzin facility are also on strike.
Typically, September tends to be a quiet period for the LPG freight market with refinery maintenance weighing on output, but the factors listed above and the act that outages are continuing have accentuated the lull this year.
