Weekly Gas Report - 27

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1 «The easiest way to predict the future, is to create it.» HIGHLIGHTS VLGC: Baltic continue to decline Ammonia: Market still under pressure Handy: Length remaining despite increased activity Coaster: Quiet in both NWE and in the MED VLGC Another rather quiet week in the VLGC segment, and yet there have been enquiries in the market and fixtures concluded on both sides of Suez. Freight rates remain under pressure and the Baltic Index has continued to decline. There has also been some talk about charterers potentially fixing vessels in the East for floating storage for contango play in the product market, which could help to somewhat shorten the shipping length. As expected, we saw two end July spot requirements from Indian importers this week, with one being fixed on a relet vessel. It is rumored that one further July Indian spot requirement remains, which would bring total July spot fixtures to seven. West of Suez, much of the discussion has been focused on the product market and the unattractive US to East arbitrage. Europe still remains the more attractive outlet for US cargoes, however there continues to be discussions about potential cancellations for August cargoes. It has however been reported that one early August spot cargo has been sold to a European Oil Major. We still see potential traders relets in the West for end-july till early-aug dates, which is putting pressure on rates and diminishing the western premium. With the Middle East and Far East returning from holidays, and acceptances coming out next week, we expect activity to pick up. Market Comments NH3 Although still under pressure, Ammonia prices moved more sideways this week, as the end of Ramadan and Eid Al-Fitr celebrations took hold and kept market activity low in the Middle East and Far East. Middle East prices were reported stable around US$ /t fob, while prices out of Yuzhnyy fell to US$ /t fob. The known July line-up out of the Black Sea currently stands a little higher than 231,700 tons. New sales of ammonia in the US domestic market are experiencing seasonal lows throughout the Midwest, meaning we are likely to see more exports coming out of the US as domestic demand wanes. In the Caribbean, Trinidad production line-up for July continues in the same struggling pace we saw in June, as the list for this month currently stands at 260,000 tons, more than 200,000 tons below what was seen in May Handy While there has been little activity in the US Gulf, North West Europe has been the center of attention in the Western Handy Size segment this week. A handful of fixtures has been concluded in the area. Despite the increase in activity we still see prompt tonnage available in North West Europe. In the Gulf, length remains and this week has not helped to absorb it. The activity seen has unfortunately not been enough to change sentiment, partly due to the fixtures reported being short haul voyages unable to soak up tonnage for longer periods. Coaster The European Coaster Market has shown little activity this week. The Med. and Black Sea remain quiet with few concluded fixtures. In North West Europe there was a decrease in activity from last week and from the Owners perspective there is a worrying length on all ship sizes. The competition between Owners on those few quoted cargos out there this week has been strong, with Charterers consequently achieving low freight levels. The pressure on freight rates could continue downwards if shipping demand fails to pick up soon, with Owners having to face the tough decision between joining in on the bids or risking idle times while waiting for sweeter deals to emerge. US$/month 4,500,000 VLGC - Timecharter Equivalent (TCE) 4,000,000 3,500,000 3,000,000 2,500,000 2,000,000 1,500,000 1,000, , ytd Week no 1

2 LPG LPG: Middle East market focusing on spot cargoes Due to an increasing supply-build from USG and West Africa, the Europe price saw some pressure. The petrochemical sector representing the main buying interest. Europe has still been showing better netback for USG cargoes compared to the Far East. With maintenance work and several cancellations for July - and potentially - August USG cargoes, cargoes out of the USG would decrease, possibly providing some price support. In the butane segment, the value was pegged at slightly lower 80% of naphtha. with market demand from China and the petrochemical sector still a notch away from showing improvement, trading liquidity has remained poor. In the US, six cargoes cancelled for July loading, together with inventory build, has caused the Mont Belvieu price to come under pressure. A series of August loading cargoes are potential cancellation candidates, due to the poor economics, unless the Far East market recovers swiftly and strongly. The Middle Eastern market continued to show spot activity this week, with a few buyers willing to secure FOB cargoes from Middle Eastern producers, with the US to Far East arbitrage still being negative. It is reported that Saudi Aramco might have sold two evenly split FOB cargoes for second July date at around US$300/mt for propane and US$315/mt for butane. August propane CP swap ended at US$301. The Asian LPG market softened along with a fall in the crude oil price. The market was well supplied with an increased inflow cargoes from Middle East and Africa, but Saipem is reported to have been awared a number of contracts in the Zohr gas field, including the field development project, with total value for the contracts estimated to above 1.5bn. Work on the project is expected to begin before then end of the month, to be completed towards the end of A small fire at Samsung Heavy Industry brought building work to a halt work on Shell s Prelude FLNG facility, although sources have been quoted as saying the fire did not cause any significant delay, with the delivery schedule to remain as planned. On Thursday, the Keep Corporation announced it had entered into a joint venture with Shell, dealing with LNG bunkering in Singapore - the principal purpose of LNG the JV being bunkering operation services to ships and marine vessels. The agreement comes on the back of Singapore taking steps to become a LNG bunker-ready port. 2

3 FIXTURES SPOT Vessel Built Cbm Qty Cargo Load Disch Laycan Rate US$ Charterer NICHIYUH MARU ' LPG RAS LAFFAN INDIA JULY 900K LS BSS 1:2 IOC CHINOOK ' LPG MEG EAST JULY AUGUST BALTIC AVERAGE GLENCORE AURORA CAPRICORN ' LPG MEG EAST 8-10 JULY BALTIC EQUIVELANT ENEOS BW BOSS ' LPG FERNDALE EAST JULY BSS RT-CHIBA BP COPERNICUS ' LPG MAA INDIA JULY 960K LS BSS 1:2 BPCL KAROLINE N ' LPG HOUSTON OPTS JULY RNR STATOIL NAVIGATOR CETO ' PROPANE BRAEFOOT BAY OPTS 8-10 JULY RNR EXXON CELTIC GAS ' LPG UST LUGA OPTS JULY RNR SIBUR CELTIC GAS ' BUTANE BRAEFOOT BAY ROTTERDAM JULY RNR STASCO EPIC CALEDONIA '8 ISO-BUTANE KAARSTO STANLOW 7-9 JULY RNR ESSAR DAVIKEN '7 PROPANE TEES BRUNSBUTTEL 4 JULY RNR SHV GOVIKEN '6 BUTANE FREDERICIA OPTS JULY RNR STASCO RATES Baltic Exchange LPG Index 44 LPG Ras Tanura/Chiba Last Week This Week Trend Weekly Baltic average (US$/pmt) Softening (US$/pcm) 504, ,507 Softening Baltic TC Equivalent (US$/pd) 16,589 15,073 Softening 12 months Time Charter - Indicators Last Week This Week This Week Trend (US$/pd) (US$/pd) (US$/pcm) cbm S/R 7,396 7, ,000 Steady cbm P/R - East 5,424 5, ,000 Steady cbm P/R - West 5,588 5, ,000 Steady cbm P/R 7,396 7, ,000 Steady cbm S/R 12,163 12, ,000 Steady cbm ETH 17,423 17, ,000 Steady cbm S/R 21,368 21, ,000 Steady cbm 21,368 21, ,000 Steady cbm 21,368 21, ,000 Steady cbm 22,189 22, ,000 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. 3

4 PRODUCTS & PRICES LPG, Natgas, Crude, IFO380 Propane Change from Butane Change from US$/pmt last week US$/pmt last week NWE FOB ARA Small % % US Mt Belvieu Non-LST % % MEG Contract Price % % Japan CFR % % NG, Crude & IFO380 NG, NYMEX % US$/mmbtu WTI, Light Crude - NYMEX % US$/bbl IFO380, Fujairah % US$/pmt Name Office Mobile Yahoo Messenger Brokers Anders Lalim la_limno Katie Du katiemin1209 Sebastian Isaksen sebastian.isaksen Eirik Schøne Ness eirik.schone Henrik Konow Verlo hkverlo Research Knut Stangebye Olsen knutstangebyeolsen Operation Håvard Teigland havardteigland Spyros Bampetas spyrosbampetas Phone: Fax: lorgas@lorstem.no (+47) (+47) Lorentzen & Stemoco AS Munkedamsveien 45 8th floor, lift E PO Box 2029 Vika, N-0125 Oslo, Norway 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. 4

5 Office Oslo Address Lorentzen & Stemoco AS Munkedamsveien 45, 0250 Oslo P.O. Box 2029 Vika, 0125 Oslo Norway Athens Lorentzen & Stemoco (Athens) Ltd Leof. Karamanli 25 Voula Athens, Greece Singapore Lorentzen & Stemoco Singapore Pte Ltd. 8 Eu Tong Sen Street, #21-98 Office 1 The Central Singapore Shanghai Lorentzen & Stemoco Shanghai Representative Office Room 2701, Shanghai Central Plaza 381 Huai Hai Zhong Road, Shanghai China New York Lorentzen & Stemoco AS (New York City) 501 5th Avenue- Suite 1707 New York, NY United States of America +1(212) London Lorentzen & Stemoco UK LTD 5th Floor, Dacre House 19 Dacre Street. London SW1H 0DJ England 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