VLGC (Very Large Gas Carrier) spot freight rates out of the U.S. Gulf Coast have skyrocketed over the last month supported by strong international demand for LPGs. Spot freight rates for propane shipments from Houston to Chiba, Japan (via the Panama Canal) have increased by 29% since September 1, settling at $252/MT, or 48.3 c/gal, as of September 25. As the chart below illustrates, freight rates have been volatile over the last two years. Rates peaked at $254/MT, or 48.7 c/gal, on September 24, up 82%, or $114/MT, since the beginning of the year. And the surge in freight can’t be blamed on delays at the Panama Canal this time. Currently, wait times at the Panama Canal (Neopanamax) are only 7 days northbound and 2 days southbound. Despite the sharp increase in freight rates, the US-Asia export arb remains open (economic) supported by a wide Asia FEI-Mont Belvieu price spread.
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- Analyst Insight
Spot LPG VLGC Freight Rates Continue to Weaken; U.S.-Asia Propane Export Arb Narrows
LPG VLGC (Very Large Gas Carrier) spot freight rates out of the U.S. Gulf Coast to Asia have collapsed since the beginning of the year primarily due to a significant narrowing of the spread between Far East Asia (FEI) propane prices and Mont Belvieu (LST).
- Blog
Let's Get Physical, Part 2 - A Step-by-Step Guide to Making an International LPG Trade
In October, some 45 MMbbl of liquefied petroleum gases (LPGs) were loaded onto ships and sent out from U.S. ports, more than 80% of it from Texas Gulf Coast terminals. Most propane and normal butane exports are tied to long-term deals between U.S. suppliers and overseas buyers, but a substantial share involves third-party LPG traders who cut deals to buy LPG, arrange for shipping and terminaling, then sell the LPG to buyers in distant lands. How exactly does all this happen? Today, we continue a series on how U.S.-sourced LPG makes its way to Asia, Europe and other key export markets.
- Analyst Insight
US Propane Exports Eke Into The New Year as the U.S-Asia Arb Shrinks
The U.S.-Asia propane export arb remained open in early January but narrowed as Mont Belvieu prices soared, shrinking the spread to Asia FEI propane, which was only partially offset by a collapse in freight rates.
