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14.05.2019 kl 23:00 3104

China imposed a 25 percent tariff on U.S. propane in August 2018. This has not had a negative ton-mile impact on VLGC demand because the cargoes that would have gone to China are still going to Asia – to buyers led by Japan and South Korea.

The key indicator to watch is VLGC transits through the larger ‘Neopanamax’ locks of the Panama Canal. With very few exceptions, VLGCs could not fit in the original locks. When the new locks opened in June 2016, almost all of the VLGCs carrying liquefied propane from the U.S. Gulf to Asia switched from the longer eastward route around the Cape of Good Hope to the westward Neopanamax locks route, which is about 40 percent shorter.

Data from the Panama Canal Authority (ACP) confirms that VLGC transits have not declined since the imposition of the Chinese tariff, which implies that the LPG shipping sector’s ton-mile equation has not been curbed.

José Ramón Arango, liquid bulk specialist at the ACP, told FreightWaves, “Increased LPG imports to Japan and [South] Korea offset the imports to China, and there was basically no effect in terms of [canal] traffic.”

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