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Global LPG Shipping and Pricing Trending Topics
November 2017 1
November 2017 2
Market snapshot
Total LPG Production 305 million tons Highest ever level
5-year market growth 18% Twice as fast as crude oil growth
Top Consumer China 48 million tons
Top Importer China 14 million tons
Top consuming sector Domestic 44%
Top Producer USA 68 million tons
Top Exporter USA 35 million tons
November 2017 3
Market snapshot
[VALUE]Mt / [PERCENTAGE] [VALUE]Mt /
[PERCENTAGE]
[VALUE]Mt / [PERCENTAGE]
[VALUE]Mt / [PERCENTAGE]
[VALUE]Mt / [PERCENTAGE]
Automotive
9kg
45kg
Forklift
Bulk
NZ consumption
Global consumption
November 2017 4
Market snapshot
LPG fleet 1’410 vessels Versus 12’662 oil tankers
VLGC’s
5-year Fleet Growth 71%
Current fleet 259
Vessels on order 15
Pressurized ships
5-year Fleet Growth 12%
Current fleet (< 2k cbm) 605
Vessels on order 5
November 2017 5
Pressurized Market : 3500 to 5000 cbm Sector Firm
Order Book 6 Ships only
Ordering Trend 7500 cbm and above
Young Fleet Over half the fleet less than 10 years old
T/C Rates Rapid recovery East – up 25%
Trade Increasing LPG and Petchem volume growth
Newbuilding Steel prices up: yards slots hard to find
Source: Fearnresearch
Natural disasters : 2017, one of the worst
November 2017 6
US West Coast ports
Global LPG Trade
Global
Regional flows
2013 2014 2015 2016 2017
Middle East 51 48 44 44 39
USA 15 19 26 29 32
November 2017 7
Volume in million tons
Evolution (in %)
2017 93 + 3%
2016 90 + 6%
2015 85 + 14%
2014 75 + 21%
2013 62
0
10
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2013 2014 2015 2016 2017
USA
Middle East
0
20
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Volume in million tons
2013 2014 2015 2016 2017
European Indexes (Platts, CIF, SH) Saudi CP Argus FEI Mount Belvieu
Arbitrage
European Indexes (Platts, CIF, SH) Saudi CP Argus FEI Mount Belvieu
Weak Arbitrage
Propane FOB USA
USD 527/Mt
SEA / China USD 590/Mt
Freight : USD 60 Arb Open +3
NWE USD 544/Mt
Freight : USD 30/Mt Arb Close – 13
Price Differentials - US & Far East
November 2017 10
-200
0
200
400
600
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1000
1200
1400
Jan-01 Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15 Jan-16 Jan-17
Saudi CP (in usd/mt) Opis (in usd/mt) Spread CP vs MB
Saudi CP versus Opis MB (in usd/mt)
Good news for Power Generation
November 2017 11
Saudi CP versus FOB Singapore Gasoil 10ppm (in usd/mbtu)
8.00
9.00
10.00
11.00
12.00
13.00
14.00
Saudi CP (in usd/mmbtu) Gasoil 10 ppm FOB Singapore (in usd/mmbtu)
Keep an eye on…..
November 2017 12
Propane/Butane – Market Divergence Ethane Trade – threat or no threat Power Generation – a promising proposition
- New IGC Code (SOLAS)
- Code on Noise Level (SOLAS)
- Ballast Water Management Convention (new convention)
- Energy Efficiency Design Index – EEDI (MARPOL)
- NOx Tier III (MARPOL)
- SOx Global Sulphur Cap 0.5% (MARPOL)
November 2017 13
Compliance cost
- The new Panama Canal opened to traffic on 26th June 2016
- In the first 12 months of operation there were approx 1’500 transits of which :
- 1/3 of the trafic was LPG transits made by VLGCs (defining the increase in trade between the USA and Asia)
- 1/2 of all transits were container ships
- Comparison :
- Old Canal traffic – 40 ships per day
- New Canal traffic – 4 ships per day
- Constraints:
- Limited Capacity
- Inflexible pre-booking system favouring liner trades (containers) not tramp (LPG)
November 2017 14
Panama Canal – a game changer ?
Market perception
November 2017 15
Crude Oil USD 57 per barrel 0%
WTI forward average in 2021
CP USD 380 per mt 34 %
Forward Propane swap average in 2021
Delivered Far East USD 397 per mt in 2021 3 33 %
Forward Index average value for 2021
Opis Mount Belvieu USD 311 per mt 38 %
Forward USA market average value 2021
Delivered Far East minus Opis MB USD 66 per mt 11 %
Spread differential to 2021
Henry Hub USD 3.15 per mmbtu 0.6%
Natural Gas in 2021
November 2017 16
THANK YOU !
November 2017 17
Disclaimer
The information in this presentation was compiled from sources believed to be reliable for informational purposes only. The information contained is intended solely for your personal reference. Such information is subject to change without notice, its accuracy is not guaranteed. Geogas makes no representation regarding, and assumes no responsibility or liability for, the accuracy or completeness of, or any errors or omissions in, any information contained herein. In addition, the information contains projections and forward-looking statements that may reflect the Company’s current views with respect to future events and market forecasts. These views are based on current assumptions which are subject to various risks and which may change over time. No assurance can be given that future events will occur, that projections will be achieved, or that the Company’s assumptions are correct. It is not the intention to provide, and you may not rely on this presentation as providing, a complete or comprehensive analysis of the Company's financial or trading position or prospects.
