After a slow start of 2015 for the ethylene fleet, several contracts were secured in the second half, which extends over the main part of 2016. Expectations are that we continue the cooperation we have achieved with important ethylene operators, and that earnings will be on an acceptable level throughout the year.
For the fully refrigerated ships (VLGC and LGC), the 2015 market was at a historical high level, and even exceeded the record year 2014. The rates fell gradually throughout the second half of 2015 and have continued dropping in the first quarter of 2016. The decrease comes from closed arbitrage between USA and Asia, and a very high number of newbuilds delivered. There are now several signs that the VLGC market will be significantly weaker in 2016, more at a historical level than 2014 and 2015. For Solvang most of the year 2016 is covered by existing contracts, resulting in limited effects from the drop in the VLGC market.
The Group had at year-end contract coverage of 94% for 2016 for the fleet, with only three LGC coming available in June – August 2016 and one VLGC in fourth quarter.