The fire-stricken hull 1074 under construction at Jiangnan Shipyard in China is scheduled for delivery in November 2014, Norway-based gas shipping company Avance Gas Holding Ltd said in unaudited results for the third fiscal quarter ended on 31 August, 2014.
This corresponds to a 30-day delay as a result of the fire reported on 9 April 2014. Avance Gas said it was working with the newbuilding construction site team of Frontline 2012 to identify the cause of the second fire from August 18th and to ensure the remaining vessels are delivered with minimal delays and to the specification required.
Avance Gas’financial highlights:
- The average time charter equivalent (TCE) rate for the fleet rose to USD 83,893/day, up from USD 45,084/day in Q2 2014.
- On a calendar basis, the TCE rates were USD 32,019/day for Q1 2014 and USD 61,269/day for Q2 2014. Approximately USD 89,300/day is expected for Q3 2014.
- TCE earnings increased to $45.4 million from USD 24.5 million in Q2 2014.
- Net profit rose to USD 32.3 million from USD 9.6 million in Q2 2014.
- Operating days were essentially unchanged at 541, compared with 543 in Q2 2014.
- Avance Gas’ Board declared a dividend of USD 0.92 per share for the quarter.
According to the reported results, continued strength in export volumes from the Middle East, combined with rising US exports, drove the LPG freight market to record high levels during Q3.
The spot market peaked in mid-July, rising to over USD 130,000/day. The market subsequently softened in August, as somewhat lower shipping demand pushed spot rates down to an average of about USD 80,000/day for the month.
“The market continues to be driven by increased US Gulf exports, which are expected to increase in Q4 2014, as new capacity comes on stream. The Baltic Index is currently quoted at about USD 92/ton, or a time charter equivalent rate of about USD 65,000/day,” the company said.
The Avance Gas fleet continued to trade in the spot market and on spot-indexed time charter contracts in Q3 2014. Driven by the strong freight market, TCE earnings were USD 45.4 million, up from $24.5 million in Q2 2014. The average bunker price paid was USD 606 per ton in Q3 2014, versus USD 601 per ton in Q2 2014.
“LPG shipping demand is in particular driven by continued strong growth in exports from the United States, on top of the steady export activity from the Middle East. Two fully refrigerated export terminals are about to be completed in US Gulf and we expect the terminals to commence export Ql 2015. Consequently, fleet utilization is expected to continue to be above 95%, which will support strong freight rates,” Avance Gas said on the market outlook.
Although the orderbook remains high, with more than 50% of the existing fleet to be delivered prior to 2017, short-term demand forVLGCs is expected to exceed new supply, the company said.