The ethylene fleet has good contract coverage and the segment looks promising for this year and beyond. The fleet balance is as always a challenge, but with cancellations at yards in China, this segment is now more in balance for the next years than at the start of 2016.
For the fully refrigerated vessels (VLGC and LGC), 2016 were the year the market turned after several years of good earnings. The market is characterized by imbalances with too many newbuilds, but also in the form of a lack of arbitration between regions. The lack of arbitration comes as a result of sustained low oil price, where the price of LPG in Asia is strongly correlated with the absolute price of oil, while LPG in the US is driven by several factors such as inventory, internal consumption and other factors. This imbalance must be corrected, which will take time, and it is expected that 2017 will see rates at challenging levels throughout the LPG segment.
The group had at year-end contract coverage of 85% for 2017 for the fleet, with one vessel operating in spot market and only four vessels coming open later in 2017.