The upward momentum of Atlantic Basin headline shipping charter rates and economics was halted in its tracks and rates dropped from mid-high $50,000 per day to the mid-high $40,000 per day in early September before recovering, according to the monthly LNG shipping review from London-based brokers Simpson Spence Young.
“AB economics went from 100 percent LNG and 50 percent-100 percent hire back to load-port to hub economics,” said the report.
With regard to cancellations, five or fewer cargoes were cancelled for November, marking the lowest number of monthly cancellations since May 2020.
This signalled further recovery of US exports into the fourth quarter.
“In the Pacific region, Japan-Korea Marker gains were supported on a mixture of production uncertainties and stronger end-user demand,” it added.
The report noted that on the demand side, the Japanese Meteorological Agency said in its winter weather report that 10 out of 12 regions in the country are expected to experience cold temperatures below the 30-year-average over December 2020-February 2021, which is the country’s peak winter heating demand season.
“Additionally, in South Korea two consecutive typhoons led to alternative fuels being sought in the prompt market. This supported spot purchasing of LNG and additional coal imports,” said the report.
“The Pacific Basin also remained long with independent and portfolio player length on offer throughout the month. There were certain loadings which were faced with fewer suitable candidates and these vessels commanded premium rates,” stated Simpson Spence Young.
“For the most part however, headline rates for Tri-Fuel, Diesel-Electrics (TFDE) vessels were largely in the mid-high $40s with BB 100 percent LNG and 50 percent-100 percent hire back to load-port,” stated the report.
“On the newbuilding front, SMART LNG a joint venture of Russian shipowner Sovcomflot and compatriot energy company Novatek announced the contract signings on orders for 10 Arc7 LNG carrier newbuilds. The ships ordered will serve the Arctic LNG 2 project,” it added.
Furthermore, three new offtake contracts were signed in September.
Shell has agreed a long-term LNG supply agreement with Hungary for 0.25 Bcm per annum of gas equivalent via the planned Croatia LNG import terminal.
Hungary’s state-owned MVM, through its trading subsidiary MFGK, booked 1 Bcm per annum of regasification capacity at the 2.6 per annum of LNG import terminal in Croatia, which is due to begin operations in January 2021.
“At the time, MFGK pledged to source its LNG imports for the facility only from western European players so as to reduce its dependence on Russian gas,” said the report.
“India’s Bharat Petroleum Corp. signed a 15-year Brent-linked LNG purchase contract from Mozambique LNG for the supply of 1 MTPA and UK natural gas company Centrica has signed a deal with China’s Shenergy for the supply of LNG,” it said.