Weekly Gas Report - 49

Always and never are two words you should always remember never to use

Market Comments

HIGHLIGHTS
VLGC: Baltic
Index fairly stable
Ammonia: Prices moving higher
Handy: Tight
ship supply in
the Americas
Coaster: Smaller ships showing length in the
Med and Black
Sea

VLGC

Handy

The most eye-catching news of the week was obviously

the finalizing of the BW LPG acquisition of Aurora LPG. BW
LPG announced that they now hold more than 90% of the
outstanding shares and have the intention to acquire all
the remaining Aurora LPG shares. The nine Aurora VLGC
vessels should commence commercial operation under
BW LPG after the acquisition, which will make BW LPG,
already the worlds largest VLGC owner, even larger. In the
spot market, the Indians were the main charterers securing vessels for December loading dates out of the Middle
East Gulf ahead of the upcoming holidays. In the west of
Suez market, there were mainly some fob cargo resales
reported as traders were largely covered for first half January loading out of the US Gulf. With holidays approaching, we are expecting activities to slow down and we
would expect the freight rate to would fluctuate within a
fairly narrow range due to little new market impetus.

The Handy market is tight in the US, which in itself is limiting activity. However, the situation across the Atlantic in
Europe shows a different picture with higher availability of
ships in the spot market. The reported Sonatrach tender
for 12 months TC was awarded to Navigator Glory (FR
22,500cbm, built 2010) and will commence in late December.

NH3
Activity was still fairly high in the international ammonia
market this week with further price gains recorded. There
was little activity in the Black Sea and Baltic Sea areas due
to a scarcity of spot cargoes. The market in the Atlantic
and Mediterranean Sea areas will see further supply constraint as the OCI ammonia plant in the Netherlands had
to be shut down unexpectedly, possibly implying more
product will have to be imported. Prices in the Far East are
also moving higher following higher price indications from
Middle east producers and a scarcity of swing supply available from Black Sea exporters. In the US prices are softening as the direct application season is abating. US production is increasing strongly as indicated by declining imports. In fact, imports fro the January to October 2016
period is down by 585,000 tons (12.9%) to 3.96 million
tons compared to the same period of 2015.

Coaster
We have seen activity levels largely maintained in North
West Europe, yet some shipping length has developed for
the 3,500cbm ships. The market in Southern Europe, both
in the Mediterranean Sea as well as in the Black Sea remained slow and traders relets have added to the list of
available ships.

Weekly Gas Report - 49

LPG

LPG prices rising

most in the US
narrowing the
arb!

Propane prices in Europe ended the week lower as most

prompt demand was covered and weather conditions
eased. The market is fairly balanced, but the rapidly shifting US arbitrage could quickly weight in on price levels as
the European LPG market is much smaller compared to
Asia and it takes much fewer US VLGC cargoes to move
the market. The sentiment is depicted in the price curve
showing a slight backwardation even as spot prices have
eased from last week. Butane prices have come under
pressure even as the supply situation remains relatively
tight, the main culprit being cheaper naphtha as the Europe to Asia naphtha is now is unworkable.

Prices in the Asian market ended the week higher, probably more due to a narrowing of the US to Asia arbitrage
rather than any particular tightness in the market. Buyers
apparently are showing some constraint in anticipation of
a high number of US cargo arrivals into second half of
January.

In the US, crude and natural gas gains drove NGLs values
higher as the reported propane inventory data came out
pretty much in line with expectations. The EIA reported a
propane stocks draw of 1.55 mn bl to a total of 99.25 mn
bl nationwide. The arbitrage to Asian and Europe contracted. NGLs undoubtedly see some support from bullActivity in the Middle East Gulf has remained fairly slow ish natural gas storage data reflecting growing US coneven following the release of the December CP just over a sumption as well as LNG exports.
week ago. Some program cargoes have been delayed.
There have been a couple of trader cargo resales. The
January CP swap has been trading some 5-6% above the
current CP, reflecting expectations of a crude driven CP
hike come January

LNG
IEA is urging India to switch from coal to natural gas in
power generation and industrial use. This can substantially improve urban air quality across the country, particularly in cities such as New Delhi which recently reported
air quality levels 16 times higher than the recognized safe
limit. Similar benefits can also be derived by the greater
use of natural gas and LNG in the transport sector. The
use of natural gas in urban areas can, among others, reduce CO2 emissions by around half, cut NOx emissions by
up to 80%, and almost completely eliminate SOx and
particulate matter emissions associated with coalburning.

The U.S. Energy Information Administration raised its

natural gas marketed production estimate for 2016 by
150 MMcf/d to an average of 77.5 Bcf/d. However, this
still represents a decline of 1.3 Bcf/d from the 2015 level,
which would be the first annual production decline since
2005, according to EIA in its latest Short-Term Energy
Outlook. In 2017, forecast natural gas production increases by an average of 2.5 Bcf/d from the 2016 level. The EIA

also raised its 2017 Henry Hub spot natural gas price forecast from its previous short-term outlook. Growing domestic natural gas consumption, along with higher pipeline exports to Mexico and LNG exports, contribute to the
Henry Hub spot price rising from an average of US$2.49/
MMBtu in 2016 to US$3.27/MMBtu in 2017.

Spot prices for Asian LNG increased 50 cents from last

week to around US$8.1 mmBtu, the highest level since
the mid-2015. The news agency cited traders as saying
that the main drivers behind the rise in prices were a deal
between the Organization of the Petroleum Exporting
Countries (OPEC) and non-OPEC producer Russia to slash
crude output to pump up prices, as well as cold weather
in northern Asia and Europe that lifted LNG demand for
heating and power generation use. Higher oil prices will
translate into higher LNG import prices for the majority of
LNG consumers as around 80% of LNG supply is sold on
contracts that links the price LNG to the price of oil, although indexation varies between contracts.

Weekly Gas Report - 49

FIXTURES

SPOT
Vessel
BW CARINA
PACIFIC BINZHOU
CARAVELLE
HISUI
SIROCCO
B GAS MARGRETHE
LUKE
MATTHEW

Built
2015
2016
2016
2010
2015
2006
2006
2007

Cbm
84000
84000
84000
81000
83000
3500
3300
3300

Qty
44'
44'
44'
44'
44'
1'8
1'7
1'7

Cargo
LPG
LPG
LPG
LPG
LPG
BUTANE
PROPANE
PROPANE

Built
2010

Cbm
22500

Trade Date
LPG
END DEC

Load
USG
RAS LAFFAN
RAS LAFFAN
YANBU
USG
BROFJORDEN
KAARSTO
KAARSTO

Disch
EAST
INDIA
INDIA
INDIA
OPTS
OPTS
OPTS
OPTS

Laycan
MID JAN
24-25 DEC
25-26 DEC
15 DEC
8-10 JAN
14-16 DEC
7-9 DEC
5-7 DEC

Rate US$
55 BSS CHIBA VIA PANAMA
985K LS BSS 1:3
1.1 MILL LS BSS 1:3
1.23 MILL LS BSS 1:3
55 BSS CHIBA VIA PANAMA
RNR
RNR
RNR

Charterer
GYXIS
IOC
IOC
IOC
GLENCORE
PREEM
STATOIL
ENI

Hire US$
HNR

Charterer
SONATRACH

PERIOD
Vessel
NAVIGATOR GLORY

Period
12 MONTHS

RATES
Baltic Exchange LPG Index
44LPG Ras Tanura/Chiba
Weekly Baltic average
Baltic TC Equivalent

Last Week
24,96
356 147
11 708

(US$/pmt)
(US$/pcm)
(US$/pd)

This Week
25,62
371 985
12 228

Trend
Firming
Firming
Firming

12 months Time Charter - Indicators

3.200 cbm S/R

3.500 cbm P/R - East
3.500 cbm P/R - West
5.000 cbm P/R
6.500 cbm S/R
10.000 cbm ETH
20.000 cbm S/R
38.000 cbm
60.000 cbm
82.000 cbm

Last Week
(US$/pd)
8 054
5 753
5 917
7 561
11 999
16 765
16 108
17 258
15 615
16 437

This Week
(US$/pd)
8 054
5 753
5 917
7 561
11 999
16 765
16 108
16 437
15 615
16 437

This Week
(US$/pcm)
245 000
175 000
180 000
230 000
365 000
510 000
490 000
500 000
475 000
500 000

Trend
Steady
Steady
Steady
Steady
Steady
Steady
Steady
Softening
Steady
Steady

VALUATIONS
We provide expertise valuations for a number of ship owning and banking clients worldwide, covering all types of gas carriers either on a
regular basis (quarterly, semi-annually) or on an ad hoc basis. Our experienced team is fully updated on the latest secondhand and newbuilding price trends and maintain a comprehensive database with historical prices. We strive to maintain an unbiased approach to valuations, which are carried out in due diligence and in accordance with established ISO procedures.
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Weekly Gas Report - 49

PRODUCTS & PRICES

LPG, Natgas, Crude, IFO380

NWE
CIF ARA
US Mt Belvieu
Non-LST
MEG
Contract Price
Japan CFR
NG, Crude & IFO380
NG, NYMEX
WTI, Light Crude - NYMEX
IFO380, Fujairah

Propane
US$/pmt

Change from
last week

Butane
US$/pmt

Change from
last week

376,0

21,3%

398,5

22,7%

318,5

7,8%

398,5

9,4%

380,0
409,0

0,0%
3,4%

420,0
438,5

0,0%
5,2%

3,72
51,43
316,00

6,15 %
1,21 %
1,58 %

US$/mmbtu
US$/bbl
US$/pmt
Source: OPIS and others

Name
Brokers
Anders Lalim
Eirik Schne Ness
Katie Du

Office

Mobile

ICE ID

+47 2252 7707

+47 2252 7739
+47 2252 7736

+47 905 30 930

+47 930 32 310
+47 901 54 760

alalim
eness
kdu2

Research
Knut Stangebye Olsen

+47 2252 7703

+47 952 48 490

Operation
Hvard Teigland
Spyros Bampetas

+47 2252 7733

+30 2108 9000 62

+47 980 43 763

+30 6973 38 2273

Email:
lorgas@lorstem.no

Phone:
(+47) 22 52 77 00

Fax:
(+47) 22 52 78 64

hteigland
sbampetas

Lorentzen & Stemoco AS

Munkedamsveien 45
8th floor, lift E
PO Box 2029 Vika,
N-0125 Oslo, Norway
www.lorstem.com

Disclaimer: The information contained within this report has been collected from a number of market sources
and is given in good faith without guarantee, for information purposes only. Lorentzen & Stemoco and its
affiliates, directors and employees are not liable or responsible for any consequences whatsoever occurring from
errors or inaccuracy of the information contained within this report.
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Weekly Gas Report - 49

Office
Oslo

Address
Lorentzen & Stemoco AS
Munkedamsveien 45, 0250 Oslo
P.O. Box 2029 Vika, 0125 Oslo
Norway
+47 2252 7700

Athens

Lorentzen & Stemoco (Athens) Ltd

Leof. Karamanli 25 Voula 166 73
Athens,
Greece
+30 210 89 000 59

Singapore

Lorentzen & Stemoco Singapore Pte Ltd.

8 Eu Tong Sen Street,
#21-98 Office 1 The Central
059818 Singapore
+65 6349 8400

Shanghai

Lorentzen & Stemoco Shanghai Representative Office

Room 2701, Shanghai Central Plaza
381 Huai Hai Zhong Road, 200020 Shanghai
China
+86 21 6391 5880

New York

Lorentzen & Stemoco AS (New York City)

501 5th Avenue- Suite 1707
New York, NY 10017
United States of America
+1(212) 684 2503

London

Lorentzen & Stemoco UK LTD

5th Floor, Dacre House

19 Dacre Street. London SW1H 0DJ
England
+44 20 7799 4444

Disclaimer: The information contained within this report has been collected from a number of market sources
and is given in good faith without guarantee, for information purposes only. Lorentzen & Stemoco and its
affiliates, directors and employees are not liable or responsible for any consequences whatsoever occurring from
errors or inaccuracy of the information contained within this report.
5