STEALTHGAS, the Nasdaq-listed owner and operator of liquefied petroleum gas carriers, has said the heightened risk of Houthi attacks against shipping are among factors sustaining an arbitrage between geographical segments in its market.

Greece-based StealthGas, which has reduced its fleet to 27 LPG carriers on the water, traditionally split its fleet evenly between Europe and the Far East.

During the past several quarters, however, it has focused more on Europe as freight rates west of Suez have commanded a premium over east of Suez.

The majority of its vessels — 19, or 60% of its fleet — are trading in the region, particularly in north-west Europe and in the Mediterranean, said company chairman Michael Jolliffe.

Another five vessels were trading in the US and Caribbean, five in Africa in some specialised trades and just three in the Middle East and the Far East. “We believe that in the short term, we will continue to enjoy higher rates west of Suez as there continues to be a shortage of suitable, well-maintained vessels in Europe,” he said.

Since navigating in the Red Sea was “unsafe”, most vessels would have to travel the longer distance around the Cape of Good Hope to shift from east to west.

“Due to the short-distance trade routes for small LPG carriers, it is rare that cargoes are found for these types of long-distance routes to make such a voyage profitable,” Jolliffe said.

“It is therefore less likely that these arbitrages between east and west will quickly fade by an influx of vessels in the area.”

StealthGas focuses on regional trade and local distribution of gas with voyages often as short as a couple of days.

Its limited number of mid-sized vessels often undertake intercontinental voyages, including the US Gulf to Europe.

Houthi attacks had also had the effect of reducing Middle East exports on larger vessels destined for Europe, Jolliffe told a third-quarter earnings call.

Reflecting this, StealthGas’ handysize LPG carriers were carrying increased US exports to Europe.

In addition, the company’s handies and medium gas carriers were “increasingly engaging” in the ammonia trades.

According to management, period rates for pressurised vessels, such as those operated by StealthGas, are at “historical highs”.

Revenues for the third quarter and first nine months of the year increased by 16.7% and 13.2% respectively, compared with the equivalent periods last year, despite fewer vessels.

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