How A Closed Strait Turned Into A Cash Machine For BW LPG (BWLP)

On August 28, BW LPG (NYSE: BWLP ) reported second-quarter results that captured just how strange the global LPG shipping market has become. Profit attributable to equity holders came in at $120 million, or $0.79 per share, while the ocean freight market kept bending around a shuttered Strait of Hormuz. The numbers are messy: shipping income missed guidance, a trading division posted a paper loss, and yet the company just guided to its best quarter yet. That contradiction is the whole story here.

The Q3 guidance is the number that jumps out. Management locked in $88,000 per available day for 92% of the fleet's third-quarter days, over three times higher than the $24,900 daily breakeven the company says covers both operations and maintenance spending. That gap exists because the war between the U.S. and Iran shut down normal Strait of Hormuz traffic, cutting Middle East LPG exports by 46% in the first half of 2026 and forcing Asian buyers to pull cargoes from the US Gulf instead. Longer voyages eat up vessel capacity, and US LPG exports climbed 16% in the same period to fill the gap, with exports to India jumping 212% as the region diversified away from the Middle East.

The company also spent $5 million on Panama Canal auction fees this quarter to lock in northbound transit slots, another squeeze on available ships. Forty-one percent of third-quarter days are already locked in at $44,300 per day, giving BW LPG a floor even if spot rates soften. The balance sheet backs this up: net leverage fell to 23.5% from 26.3% a quarter earlier, liquidity stood at $773 million, and the board declared a $0.95 per share dividend, a full payout of quarterly shipping profit after tax. Annualized return on equity hit 27% for the quarter, and proceeds from selling the BW Birch and BW Levant added another $102 million to the coffers.

The quarter's headline numbers undersell some real turbulence. Shipping brought in $74,000 per available day, missing the $81,000 target management had set entering the quarter, a gap the company pinned on $16.4 million in IFRS 15 adjustments and $12 million in Forward Freight Agreement losses, together worth about $7,500 per day. The trading arm, BW Product Services, told a similar story: it booked $127 million in realized gains. Still, it posted a $31 million net loss after a $145 million swing in the unrealized value of its open positions. Average value at risk climbed to $17 million as volatility and the term-cargo book both grew.