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Prospects of Liquefied Petroleum Gas Industry and Why it is a Growing Market

This article covers information about the State of Liquefied Petroleum Gas Market and shows the diagrams, graphs and tables of LPG trade, macroeconomics, analysis, fleet etc.

Summary

  • Macroeconomic overview.
  • Trade analysis.
  • LPG carrier fleet.
  • Market Balances, Rates & Prices.

Macroeconomic overview

GDP growth

GDP growth (year on year) Graph
GDP growth (year on year)

Steel production in China 1997 to 2007 (monthly)

Chinese Steel Production Graph
Chinese Steel Production

Trade Analysis

LPG…why is it a growing market?

  • Seaborne trade forecast to increase at a strong rate => increase in required tonnage / gas capacity i. e. demand for ships.
    • High economic growth in US, EU, Japan and China will contribute to LPG demand growth.
    • High price of crude oil & natural gas prices encourages LPG consumption.
    • LNG associated production (Qatar 2010…10 m tonnes).
    • Popular alternative energy source to oil & coal (energy diversification).
    • Environmental degradation is a salient issue.

LPG…what are the risks?

  • Weak economic growth in US, EU, Japan and China.
    • Dampen demand / consumption.
  • Exporting countries reduce LPG made available for export in order to service domestic demand.
    • Middle East…?

And the fleet…

  • Fleet growth exceeds demand growth…causing an erosion in freight earnings.
    • A likely scenario.

Industry view

Current situation
Significant capacity to be added to the LPG carrier fleet through to 2010

  • Ocean Shipping Consultants.
    • One year TC rates set to fall through to 2011.
    • Despite increases in LPG demand and supply the increase in fleet capacity is forecast to have a significant negative impact on freight rates in the near term.
  • Harry Vafias.
    • Believes that fleet growth will be absorbed by fleet replacement and stable demand.
  • MSI data reveals strong demand outlook through to 2010 – CAGR of 7,0% for LPG seaborne trade would indicate a positive trade outlook.

LPG trade to 2010 – million tonnes

LPG Trade to 2010 Graph
LPG Trade to 2010

LPG Seaborne Trade

LPG Trade Map
LPG Trade

LPG Production

  • USA & Saudi Arabia are largest producers…Saudi Arabia #1 Exporter…USA marginal exporter.
  • China, India & Russia increasing production substantially – growth rates exceed global growth rate.
LPG Producer (000 tonnes)19952005CAGR
USA45,641,8-0,1 %
Saudi Arabia18,018,90,04 %
China3,613,714,3 %
Russia5,18,35,1 %
India3,37,68,7 %
Global total171,1218,72,5 %

LPG Production by Region 1990 to 2010

LPG Product ion by Region Graph
LPG Product ion by Region

LPG Consumption

Japan, USA and China are the largest consumers of LPG…42 % of world total.

  • Japan huge importer – Seaborne Imports comprise 75 % of LPG consumption.
  • USA & China next biggest importers but dependence on imports relative to consumption is less than other countries…China (30 %) & USA (22 %).
LPG Consumer (000 tonnes)19952005CAGR
USA48,850,40,3 %
China5,920,613,3 %
Japan19,318,6-0,01 %
Russia4,26,65,0 %
India3,99,99,7 %
Global total166,1215,22,6 %

LPG Carrier Fleet

Existing fleet Vs Orderbook

LPG carrier fleet is aged:

  • 42 % 20+ years old (no. ships).
  • 33 % 20+ years old (GT).
  • 33 % 20+ years old (gas capacity).

An abundance of tonnage can be regarded as prospective scrap.

Existing FleetOrderbookOrderbook/Existing Fleet Ratio
1 081 ships192 shipsArrow17,5 % => Number of Ships
10,4 million GT4,4 million GT42,3 % => Gross Tonnage
15,7 million Cu. M7,1 million Cu. M45,2 % => Gas Capacity

Fleet Compound Annual Growth Rate (CAGR) of 6,0 % from 2007 to 2010.

Fleet development…million Cu. M
Size profile Cu. MFleetOrderbookTotalFleet/Orderbook Ratio% change in fleet
<6 k1,70,21,812,0 %10,9 %
6 k – 22 k1,90,62,531,5 %33,7 %
22 k – 40 k2,10,72,833,3 %34,8 %
40 k – 60 k1,30,01,30 %0 %
60 k8,85,314,160,2 %60,8 %
Total15,76,922,643,9 %43,6 %

Age Profile – number of ships

LPG fleet age profile - by size range Graph
LPG fleet age profile – by size range

Age Profile – gas capacity

LPG fleet age profile - by size range, Graph
LPG fleet age profile – by size range

Age Profile – proportion of number of ships

LPG carrier fleet age profile - by size range, Graph
LPG carrier fleet age profile – by size range

Fleet versus Orderbook – Cu.M

Proportion of Existing Fleet & Orderbook - Size Range, Graph
Proportion of Existing Fleet & Orderbook – Size Range

Fleet versus Orderbook – number of ships

Proportion of Existing Fleet & Orderbook - Size Range, Graph
Proportion of Existing Fleet & Orderbook – Size Range

Delivery Schedule – number of ships

LPG carrier fleet development - by size range, Graph
LPG carrier fleet development – by size range

Delivery Schedule – Mn Cu.M

LPG carrier fleet development - by size range, Graph
LPG carrier fleet development – by size range

Market Balances, Rates & Prices

Balance of shipping demand and ship supply – ex scrapping
20062007200820092010
Deliveriesnumber4159796720
mGT0,60,91,91,50,5
Mn Cu. M0,91,43,12,40,8
Fleet Developmentnumber1 0641 1231 2021 2691 289
mGT10,311,213,114,715,2
Mn Cu. M15,617,020,122,523,3
Growth% Mn Cu. M6,0 %8,9 %18,1 %12,1 %3,6 %

Fleet Development 1990 to 2010…what can we be relatively certain about?

LPG Carrier Fleet Development (>6 000 Cu. M ) 1990 to 2010, Graph
LPG Carrier Fleet Development (>6 000 Cu. M ) 1990 to 2010

Spot Rates

SPOT 43 000 mt AG/Japan LPG Rates, Graph
SPOT 43 000 mt AG/Japan LPG Rates

LPG TC Vs Contracting

LPG 12 Month TC Rate Vs Contracting, Graph
LPG 12 Month TC Rate Vs Contracting

LPG carrier supply responses – contracting & deletions

LPG Carrier Supply Responses, Graph
LPG Carrier Supply Responses

Vessel Employment (Demand by Cargo – All Sizes)

Demand by Cargo - All Sizes, Graph
Demand by Cargo – All Sizes

Vessel Employment (6 k – 22 k Cu. M Demand by Cargo)

6k - 22 k Cu. M Demand by Cargo, Graph
6 k – 22 k Cu. M Demand by Cargo

Vessel Employment (22 k – 40 k Cu. M Demand by Cargo)

22k - 40k Cu. M Demand by Cargo, Graph
22 k – 40 k Cu. M Demand by Cargo

Vessel Employment (40 k – 60 k Cu. M Demand by Cargo)

40 k - 60 k Cu. M Demand by Cargo, Graph
40 k – 60 k Cu. M Demand by Cargo

Vessel Employment (60+ k Cu. M Demand by Cargo)

60 k+ Cu. M Demand by Cargo, Graph
60 k+ Cu. M Demand by Cargo

LPG Carrier Market Fundamentals

Market Fundamentals, Graph
Market Fundamentals
Vessel Operating Costs 2003 – 2007 (US dollar per day)
ManningH&MP&IR&MOthersTotal
20032 6703552151 8752 3857 500
20042 7704652651 9602 4807 490
20052 6704452902 2502 6258 280
20062 9354703002 1952 9608 860
20073 0505003152 0952 9958 995
% increase14 %41 %47 %12 %26 %20 %

Read also: The State of Global Liquefied Petroleum Gas Market in XXI Century

Footnotes
Sea-Man

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Сентябрь, 19, 2022 67 0
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