BERMUDA, 19 February 2021 - Avance Gas Holding Ltd (ticker: AGAS) today reported unaudited results for the fourth quarter 2020.
Q4 was a strong quarter for LPG as we predicted back in our Q3 reporting. We saw strong US exports coupled with good buying from Far Eastern buyers, representing 80% of the LPG demand.
US exports averaged 77 cargoes per month, up from 68 per month in Q3. Year on year, there were 837 VLGC cargoes exported in 2020 versus 744 in 2019. The AG loaded an average of 53 VLGCs per month in Q4, slightly down from Q3 which was principally due to OPEC cuts due to oil pricing.
The main drivers for the strong freight market, together with a compliant commodity price, have been the continued market inefficiencies in particular the slower than usual discharge in India and China and the massive delays in transiting Panama Canal. These all add to a stretched fleet and increased utilisation profile and therefore a higher freight market.
The Panama Canal has had a particularly noticeable impact with delays ranging from 5-10 days and dependent of the subsequent strength of the freight market, adding between 15-25 USD to the delivered price of LPG in the East. This ultimately was one of the main factors that culminated in the market correcting itself so violently in January of this year where rates moved from $115,000/ day in Time Charter Equivalent on a Ras Tanura basis down to $35,000/day in the space of 3 weeks.
Q1 started off strongly but a US Gulf FOB price increase, due to colder than anticipated weather coupled with panama delays and a lack of buying activity in the East have resulted in a closed arb and a correction in commodity and freight prices.
The outlook for 2021 remains positive but subject to change with the volatile freight markets. Fundamentally it remains a positive outlook with US exports expected to grow year on year and demand in the Far East to increase with China being the main driver specifically with the new PDH plants amounting to a 2 million metric tons additional volume. Through a more robust oil price, it is expected LPG will remain the preferred petrochemical feedstock, offsetting the possibility of demand decline due to naphtha switching.
PRESENTATION AND WEBCAST
Avance Gas will host an audio webcast and conference call to discuss the company's results for the period ended 31 December 2020 on Friday, 19 February 2021, at 14:00 CET. There will be a Q&A session following the presentation.
The presentation and webcast will be hosted by:
· Mr. Ben Martin - CCO
· Mrs. Randi Navdal Bekkelund - CFO
The presentation will also be available via audio webcast, which can be accessed at Avance Gas' website www.avancegas.com. Dial in details are +44 (0) 207 192 8338 (UK and International), +1 646 741 3167 (US) or +47 21 56 30 15 (Norway). Please quote the passcode: 8189126. Phone lines will open 10 minutes before the conference call.
For further queries, please contact:
Ben Martin, CCO
Tel: +41 77 526 47 28
Randi Navdal Bekkelund, CFO
Tel: +47 22 00 48 29
ABOUT AVANCE GAS
Avance Gas Holding Ltd operates in the global market for transportation of liquefied petroleum gas (LPG). The company is one of the world's leading owners and operators of very large gas carriers (VLGCs), operating a fleet of thirteen modern ships and four Dual Fuel LPG newbuildings due for delivery in Q4 2021/Q1 2022/Q4 2022/Q1 2023. For more information about Avance Gas, please visit: www.avancegas.com (http://www.avancegas.com).
This information is subject to the disclosure requirements pursuant to section
5-12 of the Norwegian Securities Trading Act.