BW Group says orders 4 new VLGCs from South Korea's Hyundai Heavy Industries

BW Group, one of the biggest operators of LPG carriers, has committed to buying four new Very Large Gas Carriers from South Korea's Hyundai Heavy Industries, the firm said Wednesday, in line with the recent surge of vessel buildings and acquisitions in an expanding liquefied petroleum gas market.
"They are 84,000 cubic meters each and this purchase is part of our fleet-renewal program and is in keeping with our commitment to provide a fleet of quality vessels for our customers," a company spokesman told Platts.
The VLGCs will be delivered between fourth quarter 2014 and second quarter 2015, she said.
The company declined to reveal the prices of the vessels. Shipping analysts estimate a new-building price for a VLGC at around $71 million.
BW Group in May purchased Maersk Tankers' five owned-vessels and took over the five existing time-charter commitments, in a bid to boost its share in an export market set to grow 5% annually through 2016 with the jump in US shipments as the expanded Panama Canal opens and increased supply from the Middle East.
This also marked the exit of Maersk Tankers from its VLGC segment, the Danish shipping giant had said.
"On Maersk Tankers VLGCs, we are preparing for the delivery of the vessels and once they are successfully received, we will update our fleet list online at www.bwmaritime.com," the spokesman said.
Bermuda-based BW Group currently owns and operates a combined fleet of 93 vessels, of which 23 are VLGCs, and the company had said its vessel acquisitions are aimed at providing ready access to vessels in all regions at all times.
CAUTION AMID OPTIMISM OVER DEMAND AND FREIGHT RATES PROSPECTS
Last November, its unit BW Gas, bought the 54,490 dwt BP-owned LPG tanker British Confidence, renamed BW Confidence, at just below $55 million, market sources had said.
With BW's latest orders at Hyundai Heavy Industries, the industry has seen at least 43 orders for newbuilds, or older ships acquired this year and last year, not including recent activities in the second-hand market, according to data compiled by Platts.
This has prompted shipping brokers and consultants to caution that the volatile market should watch for signs of over-building and oversupply, even though industry sentiment for demand and freight rate prospects are upbeat in the medium term.
Industry sources said a number of Chinese firms are also seeking older VLGCs and at least one was heard to have recently bought a vessel. China does not have a VLGC fleet, but with imports -- especially from the US -- expected to rise along with developments of several propane dehydrogenation plants, it will seek to cut costs by developing its own fleet for long-distance trips.
China Oriental Energy, which is building a joint venture 1.2 million mt/year PDH plant for producing propylene at Zhangjiagang, is said to have placed orders for six VLGCs, with up to 16 options at a Chinese yard, and deliveries are scheduled to start end-2014, Chinese media had reported.
Industry sources said discussions with Yangzijiang Shipbuilding (Holdings) following the signing of a memorandum of understanding, could be restarted, but a final agreement has yet to be reached.
Sources said China Oriental Energy may also be exploring talks with Japanese and South Korean shipbuilders, but this could not be confirmed.
Source: Platts