vlgcs

Throughout most of the SIMON SAYs blogs produced so far I’ve concentrated on the refrigerated LPG market, transported mainly on very large gas carriers (VLGCs), between continents and across large spans of water, to get the supplies to their end destination. Of the approximately 105 million Mt of LPG shipped by sea, the movements by VLGC account for about 70-75 per cent of this trade, but what are the reasons for the other quarter of seaborne volumes being moved by other modes of transport, and what are the striking differences.

So, we are getting even closer to the implementation of IMO 2020’s Sulphur cap, I bet you’re all prepared and excited to see what happens next, I certainly am! I think ship owners have made their minds up about both the short-term switches they have to make, as well as fueling decisions for future new buildings, especially VLGCs. The big question though is what will sit in the middle for those who have basically said they will “suck it and see”. The buzz is certainly dual fuel, and maybe it will also be part of the reality.

I was kindly invited to attend the first Argus LPG Awards for Excellence ceremony, this week in London’s Science Museum. I have to say it was a great success, and was lovely to see such a broad representation of our business, and some worthy winners as well. “You know who” picked up the best trader award, yes I do mean Seb Willems at Glencore, and he’d already got his winner’s speech prepared, that’s why he is #1, it’s all in the preparation! Mary-Jane Hogg deservedly won the executive of the year, and there were awards for Ineos, GE Power and Noreen Howat at Aggreko.

It’s looking as if it’s been another one of those weeks in the LPG world, where defining a forward view of the market could go one of many ways, and the backcloth is an ARB market that initially headed south but has now regained some broader momentum. In today’s SIMON SAYs I’ll take a look at what the key indicators are up to, and what has happened to them over the last couple of weeks, to see if there’s a clearer direction going forward, as cargoes are starting to be talked for the January 2020 arrival period in Asia.

I bet some of you are saying that all I seem to talk about these days is that damn ARB, from Houston to Chiba, but to soothe any sore feelings I’m going to explain a little more about the direction of seaborne trade. Not just the route from the U.S. to Asia, however important it might be. We’ve all seen the world maps with those directional arrows, and in a nutshell that’s pretty much what it is all about. Whatever anybody says you can’t beat a good world map!

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.

It’s so tempting to say I told you so, but it feels as if now is one of those moments, as the physical world for once is clearly calling the shots, and more importantly it’s shaping the market, especially as we near the pivot point, where the northern hemisphere winter begins.

I always remember in my early days in the LPG business being told about this venerable place in London called the Baltic Exchange, set up in 1744 after shipowners and merchants gathered to discuss and transact business over a cup of coffee, at the Virginia and Baltick Coffee House, on Threadneedle Street.

Every time I switch on the television these days I see a box counting down in the top left-hand corner of my screen, more often than not it’s showing how many days to go until Brexit or how long is left on Transfer Deadline day. Soon we will be seeing the same countdown zone appearing on the commodity screens throughout the oil and gas sector, but this time it’ll be specifying how many days to go to IMO 2020.

In yesterday’s SIMON SAYS I looked at structure, threw in a little defining of the term itself, and hopefully led you down a regional path, where I’m seeing an interesting divergence developing between the U.S. and its ARB opposite-regions, namely Asia and North West Europe.