London: The strength of most shipping markets in the months ahead will depend on demand - for iron ore, coal and other raw materials in China and India.
However, the liquid petroleum gas (LPG) business is based on different fundamentals, with its core business closely associated with supply, as well as demand - liquid petroleum gas is a by-product of crude oil production, refining and gas processing. In a recent report, Clarkson describes the LPG business as a "mysterious segment" of shipping. Its owners - in contrast to many others - have not been enjoying super-profits carrying some of the world's most basic cargoes, as in the dry bulk market; instead, they have been shipping some of the most sophisticated products, at temperatures as low as minus 100° C, and at modest returns. There are only 1,100 LPG tankers in total, according to Clarkson statistics, and half of them are small vessels of less than 5,000 metres_ and the fleet of very large gas carriers (VLGCs) comprising just 120 vessels. The sector demonstrated only modest growth of less than 4% p.a. in the years leading up to 2000. However, with renewed interest in LNG production, providing associated gases as by-products, there has been a spell of new investment in LPG carriers and a significant volume of tonnage is now being delivered.
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