The VLGC market freight rates in 2012 were very similar to those of 2011. During the second and third quarter, rates were driven up and were maintained at a high level led by increased exports from Saudi Arabia and Qatar. This was paralleled by high import demand and consequent congestion in India that led to a tight vessel supply in the Middle East Gulf. The spot market was further boosted by arbitrage between the West and East of Suez. A relatively high number of cargoes were shipped from the Atlantic Basin, and to a smaller extent from the Mediterranean, to the Far East.
However, the West-East movements came to a halt in the third quarter as the US/EU-enforced sanctions against Iran during the summer months gradually led to a shortfall of about five to seven cargoes per month from the Middle East. The annual maintenance that took place on the export facilities in the Middle East temporarily limited the number of available cargoes even further, and towards the end of the year the low export volumes were reflected in the freight market, which was hovering in the high USD 30’s pmt. Incremental LPG export volumes from Angola, expected to be around 1 million metric tons per annum, were scheduled to come on stream during the year, but the startup has been delayed until mid 2013.
Only two VLGC new build were delivered in 2012, out of an expected seven. One new build was cancelled by troubled owner Sanko Steamship, and four new builds were postponed for delivery from late 2012 to early 2013.