Shipowner BW LPG upbeat on 2023 outlook

Oslo-listed shipowner BW LPG reiterated its positive outlook for 2023 despite the large newbuild orderbook, with continued growth of LPG exports expected to come from North America.

The firm posted some key underlying drivers which have formalised their its on the outlook for 2023. These include oil prices being conducive to continued export growth from the US and steady growth from the Middle East, additional propane dehydrogenation (PDH) plants coming online in China with an improvement to operating margins, and an increase in shipping inefficiencies with heavy dry-dock schedules and Panama Canal transit congestion.

The firm expects LPG exports on very large gas carriers (VLGCs) from North America to grow significantly in 2023 — by 17.6pc — to around 53mn t, from 45mn t last year. While it does not expect exports from the Middle East to grow this year — holding around 37mn t.

North American LPG exports grew by 18pc to 14.7mn t in January-March, more than 90pc of which was carried on VLGCs. Deliveries from North America to the Far East rose by 1.1mn t on the year, during the period.

Chinese LPG imports rose by 13pc to 6mn t in the first quarter, buoyed by the relaxing of Covid-19 restrictions. While deliveries to India also grew by 27pc to 5.1mn t in the first quarter. This remained just below the record high volumes imported in the fourth quarter last year, BW LPG data show.

Freight rates during the first quarter rose significantly on the year, despite the drop off in levels in March. The Argus Ras Tanura-Chiba VLGC freight rate averaged $87.58/t in the first quarter, compared with $57.12/t in January-March 2022. The Houston-Chiba rate averaged $137.32/t in the first quarter, compared with $101.02/t in January-March 2022.

On newbuilds, 17 out of the 45 VLGCs due to be operational in 2023 have been delivered. Another 14 vessels are due to be delivered in 2024, with shipyards booked out until the second half of 2026, BW LPG said.

1Q profits surge

BW LPG's profits jumped to $130.7mn in the first quarter 2023, up 123.4pc from $58.5mn in the same period last year.

BW LPG's time charter equivalent (TCE) rates averaged $58,700/d in January-March, compared with $36,900/d in the first quarter. The firm posted $200.3mn in TCE incomes from the period, compared with $130.7mn a year earlier. BW LPG cited higher LPG spot rates and higher fleet utilisation as the key driver for the rise.

Looking ahead, BW LPG has fixed 90pc of its available fleet days in the second quarter at around a rate of $50,000/d.

By Jamie Aldridge