French orders to foreign shipyards

68
US$ 1,000 PCM
800
700
600
500
400
300
200
100
0
Although such a situation of reduced availability,
demand and global movements was not a real surprise
with the post-crisis effects in the petrochemical industry,
one of the main locomotives for end users' consumption
and therefore shipping sensitivity. The same was quite
disappointing for shipping activity all along the year until
some reverse and encouraging signs were observed
during the last quarter.
As usual every year, a sporadic but positive activity took
place thanks to plants "outages" in Europe and Far East,
giving the owners exposed with idle tonnage some
temporary relief. Product pricing as well, mainly ethylene
and propylene, reached very high cif levels which should
logically be a good support for shipping, but the corresponding
lack of molecules did not allow enough
transportation demand.
The year 2000 should see a reverse tendency however,
with a firmer activity due to increased consumption and
corresponding higher transportation requirements
for petrochemical gases.
Last but not least, a special note should be made on the
bunker price which, following the oil barrel price, has
gone up by more than 100% since early 1999. Spot
freight rates or time-charter equivalents should therefore
be read carefully when comparing freight rates over a
12 month period, as voyage economics are significantly
affected by such wide bunker fluctuation.
LPG carriers 3,000-20,000 cbm
medium-term t/c (6/18 months)
12-20,000 cbm
6-11,000 cbm Ethylene
3-5,000 cbm
Jan 94 Jan 95 Jan 96 Jan 97 Jan 98 Jan 99
Situation by ship size segments
• VLGC - 70,000 to 86,000 cbm
A very difficult first half year for the few owners controlling
this segment of tonnage, more exposed to the spot market
after the redelivery of many previous time-chartered ships.
The freight rate for the usual benchmark LPG voyage
from the Middle East Gulf to the Far East reached a bottom
level of mid/high $10's level by April, and slowly stabilised
between $25 and $27/mt until October prior firming up
at $32-33/mt by mid-December. The time-charter
equivalent for such voyages on a 75,000 cbm at today's
bunker prices gives a fluctuation ranging between
$375,000 per month for the lowest freight rate to
$775,000 for the highest $33/mt level. We can observe
the volatility of this market despite it is controlled by very
few operators. There again, higher prices of LPG had
negative impacts on the shipping movements.
Period coverage was moderately active with a few ships
secured from 3 to 12 month periods at time-charter
monthly levels ranging between $600,000 to $700,000
depending upon vessels specifications and period involved.
Several newly built units ordered in 1997 and 1998 will be
delivered to their contractors (the latest being Sonatrach's
84,000 cbm "Reggane" from Kawasaki yard delivered
in early December) during 2000 and 2001. It will be
interesting to see how this additional capacity will
affect the sensitive balance of this specific segment of
the LPG market.