Dorian LPG optimistic on market outlook as focus shifts to US exports and Panama Canal

John C Hadjipateras-led shipping company recorded revenues of US$81M for the three months ending 31 December 2024, a 50% drop from the US$163M posted during the same period in 2023. Dorian LPG attributed the decline to lower average time charter equivalent (TCE) rates, which fell by US$35,867 per available day to US$36,071, primarily due to weaker spot rates.

Net income for the quarter stood at US$21M, a decline from US$100M in the same period of 2023.

Demand shifts

Inefficiencies at the Panama Canal, a narrowing US-to-Asia arbitrage, and supply pressures from a high number of newbuildings delivered in 2023 contributed to market pressures.

Dorian LPG highlighted weaker import demand from China, partly due to reduced steam-cracking demand. As a result, total LPG imports in Q4 2024 fell to 8M tonnes from a peak of 10M tonnes in Q2 2024.

In the Middle East, OPEC+ announced an extension of the additional voluntary production cuts introduced in November 2023, continuing through March 2025. While this move lowered anticipated LPG exports from the region, total Middle East LPG volumes still reached a record high for 2024.

Additionally, Dorian LPG’s investor presentation revealed US waterborne LPG exports increased 10% year-over-year, reaching 17M tonnes in Q4 2024.

Positive outlook

Amid these market developments, Dorian LPG chairman, president and chief executive John Hadjipateras expressed optimism about future prospects.

"With additional export capacity coming online in the US this year and a modest orderbook, we have a positive market outlook," he stated.

According to Dorian LPG’s estimates, three new very large gas carriers (VLGCs) entered the market in Q4 2024, representing a moderate expansion of the global fleet. SSY’s recently published annual review indicates 13 VLGCs are expected to be delivered in 2025, significantly lower than the 25-ship average of recent years. Additionally, SSY estimates around 80 VLGCs will undergo mandatory drydock maintenance this year.

Dorian LPG’s fleet currently consists of 25 modern VLGCs.

Key factors for 2025

According to SSY, two key factors that could shape trade dynamics in 2025 are the expected export expansion of Energy Transfer in the US Gulf and developments in the Panama Canal.

SSY expects Energy Transfer to bring an additional 250,000 barrels per day online by mid-2025, which is likely to drive stronger demand for LPG shipments, particularly to Asia.

Regarding the Panama Canal, SSY head of LPG, Thorstein Bergersen, noted, "With the recent changes to the Panama Canal’s slot allocation policies, which are likely to reduce the number of auction slots available, congestion and delays could increase, further tightening VLGC capacity."

Furthermore, the large orderbook in the container and LNG segments is increasing competition for Panama Canal slots. Any reduction in slot availability could have a ripple effect, driving up freight levels, he added.