A new round of sea freight increases
Persian Gulf-Japan VLGC rates were valued at $56/mt May 7, with shipping sources expecting levels to touch around $60/mt this week, the highest since
Jan. 28 at $61.5/mt, S&P Global Platts data showed.
VLGC rates on the Houston-to-Japan route were at $88/mt between April 20 and May 4 -- a three-month high -- before easing to $87/mt May 7, Platts data showed.
"Most of the competitive ships in the [US H1 June] fixing window have been tucked away and the number of uncovered cargoes may outnumber available ships," ship brokerage Gibson said in a report dated May 6.
"Additionally, the volume of ships going into dry dock in the last few weeks has increased, coinciding with a large US export program. It is therefore unsurprising that owners are very bullish going forward."
"We are also starting to see the effect of the dry docking and also quite a few vessels are heading to the US rather than the Persian Gulf, as the PG market was quite slow just a week ago," a shipping source said.
But as the Middle East market shows signs of picking up, with Kuwait Petroleum Corp. and Qatar Petroleum recently selling spot cargoes for May and June, while other major producers were expected to accept June term nominations without cuts or delays, even as Indian spot buying is re-emerging, the region will have to compete for vessels, traders said.
"There is still a few ships that come open to the Far East and that can go to the Persian Gulf, rather than the US. But I would think most of them will head to the West as the US market seems to be moving. Hence, there's a chance to get longer voyages on decent rates rather than hope for an active Persian Gulf market in June with shorter voyages," the shipping source said.
"May will most likely see an active Persian Gulf market in June with shorter voyages. I think the Persian Gulf might have room for upward move on freight, especially if ADNOC and Saudi Aramco is expected to have have no cuts."
Some interest is also seen from West Africa, sources said.
