Yesterday I was in my comfort zone, the market action was clearly at the front of the curve, where some real time world LPG supply issues were having a significant influence on demand decisions in Asia, as we enter that winter run-in, just like the old days. Middle East LPG exports in October down, down from Saudi Arabia and right down out of Iran. U.S. Gulf exports at no change, despite being told we were supposed to be getting a 15% increase in export slots late third quarter.
I was relaxing in my Houston apartment a couple of nights ago, getting ready for the big ball game, they call it the “World” series here, and the Houston Astros are in it, playing another American team, surprise surprise, the Washington Nationals. Now, Washington used to be originally the Montreal Expos, but they are truly a U.S. team today, even their cap looks as if it’s sponsored by Walgreen’s.
Over 30 years ago I made my first, and until last week, my most recent visit to Mont Belvieu, Texas, about 40 miles to the east of Houston, along Highway Interstate 10. In the 1980s, I remember there were a few pipes poking out of the ground, and I had just visited Enterprise’s already impressive Terminal, I won’t say export terminal, as they were doing both exports and imports at the time. But now the whole area is a vast array of fractionation towers sprouting up in all areas. Some tall, some not so tall, but none were small.
It’s one of the most exciting parts of trading is not just buying a cargo somewhere, anywhere, but being able to fix a ship to load it, especially a Very Large Gas Carrier (VLGC). Of course, I like the pressurised, semi-refrigerated, mid-sizes etc., but to me the big ships are the heart of international LPG trading. I explained in Monday’s SIMON SAYS how the two cost elements of the ARB are the terminal fees, and the freight rate applicable for the Houston to Chiba, Japan voyage.
In yesterday’s SIMON SAYS, I started to explain the physical cost elements that sit in the middle of the ARB price spread, between Mont Belvieu and Japan, i.e. the terminal fees in the U.S. Gulf and the freight rate that applies between Houston and Chiba. I then followed it with the current market rumble I’m hearing on both of the legs, as we approach another winter in the northern hemisphere and as always an interesting time ahead for LPG prices.
I can’t believe I’ve been waxing lyrical about the LPG market since June this year, trying to expose interesting areas of debate, and hopefully reaching a few thought-provoking conclusions along the way. As SIMON SAYS evolves, so does my audience, amazingly it’s growing quickly, and I have to admit, writing the blog has maybe taken precedent over any form of official launch or roll-out. But it’s happening and I’m very appreciative of everyone’s support and ideas, long may it continue. I hope you feel the same as I do.
Okay, it’s time to give you my thoughts on the best product and ship brokers that I’ve had the pleasure to work with over my career in the LPG industry. I’ve tried to be fair in my judgement and honest in my conclusions, which as always, will lead to a lot of readers disagreeing, especially if it is them not at the top, or vice versa.
I’m really enjoying looking in on the LPG market from the perimeter fence for once, and there’s no bigger question on my mind than, when? The “when” relates to when are we going to see somebody in the LPG shipping market really break the new building ice, not just crack it in a couple of places. The gauntlet has been thrown down, but will anyone pick it up?
How on earth can we explain the strength being shown in the Very Large Gas Carrier (VLGC) sector these days, as it pushes to levels not seen since this time in 2015. All the pain and anguish the ship owners have had to suffer since 2015, now seems to be far behind them, instead the market is burdened with high rates, lack of tonnage availability, and the sobering reality of potential delays incurring the current exorbitant cost of demurrage.