Global LPG ship market and its development trend

By　Cai jingwei & Sun chao

J udging from the competition pattern, the global shipbuilding market of LPG is basically monopolized by three countries i.e. China, Japan and Korea. The Japanese and Korean shipyards have made remarkable achievements in the construction of LPG ships, especially the “double high” VLGC. Seen from the existing LPG ship orders in hand, as of the end of October 2017, 19 shipbuilding enterprises in total in the world have LPG ship orders, a total of 75 ships and 3.413 million cubic meters, in addition to a few small and medium sized LPG, most orders are carved up by shipyards from China, Japan and South Korea, especially the VLGC the construction of which is highly dif fi cult, 31 ship orders have all been carved up by shipyards from Japan and South Korea.

In the next few years, a large number of LNG projects including shale gas projects in North America are expected to put into operation successively, plus the expansion of Middle East refining capacity, both are conducive to the growth of global LPG supply. The growth of the global LPG shipping volume will fall to 4% to 5% middle level from the two fi gures super high level recorded in the past few years.

As of now, the global LPG ship orders in hand accounted for 10.4% of the existing fleet capacity, and the arrangement of delivery of holding orders is relatively dispersed, so in the next few years the pressure of handheld orders is relatively small. In addition, judging from the existing fl eet ship age structure, at present, the capacity the old ships of 20 years and above still account for more than 30% of the LPG ships in operation. In the current downturn shipping market, the operation economy of these old capacities is very poor and it is highly possible for them to be dismantled in short and mi term. Considering the hand-held order delivery plan and the structural characteristics of existing fleet age,the LPG fleet growth will be slow in the near future,and the growth rate in 2017 is expected to fall to 9%.The capacity growth from 2018 to 2020 will further fall below 3%.

In conclusion, it is estimated that the growth of global LPG ship capacity will be slower than that of the same period in the beginning of 2018. The relationship between supply and demand will gradually improve, and the shipping market will slowly recover. The shipping rate of LPG ships will gradually increase, and the business of ship owners will also improve.In terms of demand for new ships, taking into account the excessive capacity of the current global LPG shipping market, coupled with the decline of owner’s business performance, their will to build new ship is not strong.So, it is not possible for the global LPG new ship market to have a substantive change in 2017, and the new ship turnover remained at about 20 vessels. In the next few years, the development of the global LPG ship has good market prospects, the pressure of delivery of hand-held orders is smaller, and a certain scale of old ships will be dismantled, the relationship between shipping market supply and demand will be improved. It is estimated that the new ship demand of LPG will gradually rise, and the average annual turnover is expected to reach 40～50 new ships in 2018～2020.