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VLGCs: Market remains in trouble
Mar 30:   LPG vessel fleet owners, particularly in the very large gas carrier (VLGC) segment, has been facing very difficult times of late.
8For a large LPG importer like India, it is important to understand the dynamics of this business for future planning.
8There is a surplus of vessels in the market and VLGC rates have fallen by 75% YOY in 2016, leading to a 23% reduction in secondhand prices
8The VLGC fleet has grown by 43 ships or 22%  while arbitrage has collapsed to $91/ton from $240/ton in the past year
8But hope stems from the fact that the global VLGC trade has grown by 7 MT or 12% with China (29%) and Korea (20%) driving import growth
8An LPG carrier "heat map" carried here shows the global trade in the product in its true perspective
8VLGC earnings are near the 15-year historical low as a proportion of the cargo value
8Over the last 16 years, VLGCs have shown poor aggregate investor returns
8Due to prolonged periods of lower freight rates, VLGCs have frequently operated below breakeven levels
8Demand has been very strong with 3 consecutive years of  more than 15% but unfortunately, so has fleet growth
8With demand likely to grow strongly, what is the future in the VLGC segment?
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