US LNG: October – December 2020

Thursday, 14 January 2021
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October-December exports at 15.76mmt on 31st December - Exports more than doubled over July-September period - Total shipments up 35pct over three-month period last year - Avg. US capacity utilisation at 88pct for report period.

 

Following a difficult summer, US LNG exports rebounded between October and December. Spurred by robust demand growth in Asia and South America, US LNG exports for the period covering October, November and December stood at 15.76mmt, more than double the 6.95mmt exported between July and September. These winter cargoes had a delivery horizon of 9th February at the time of writing. Average capacity utilisation for the period had thus rebounded from just 54pct for July-September to 88pct for October-December. This also meant total US LNG exports for the period increased considerably above their year-on-year levels, shipping 4.05mmt (35pct) more in October-December 2020 than for the equivalent period in 2019.

The winter recovery of US LNG exports was led by Cameron LNG, which rebounded from profound production difficulties in September and October. The plant was disconnected from its power supply, which was only partially restored when Tropical Storm Beta hit the coast of the US Gulf of Mexico. Overall, US LNG exporters were operating slightly above nameplate capacity in December after they had kept pushing production throughout October and November. Although we therefore do not expect overall US LNG export growth to accelerate much further since it already operated close to capacity in December, we nonetheless see portfolio players maintaining high output in January.

Interestingly, US LNG exporters increasingly opted to ship their cargoes to the Pacific via longer routes through the Suez Canal, South Africa’s Cape of Good Hope and Chile’s Cape Horn. Although the Panama Canal route remained the most popular option for US LNG to reach the Far East in particular, we noticed a distinct rise in popularity of the route around the Cape of Good Hope and via Suez among US LNG exporters. Transit costs via Suez tend to be lower than their Panama equivalent whilst the route around South Africa does not carry extra transit fees. Whilst there remained a time penalty of roughly a week for avoiding Panama – a significant difference given the recent steep rise in charter rates – many of the vessels are owned or controlled by the portfolio players themselves and the savings in transit fees will have helped to offset several days’ worth of charter rates in some cases. Moreover, a significant tonnage build-up off both the east and west coasts of Panama aided by a surge in container demand prior to Christmas may have also worked to make the route less attractive. According to our voyage data based on originally scheduled arrivals, some LNG shippers had to contend with delays of up to four days.

US LNG Still in Transit

At the time of writing, 47 cargoes (3.18mmt) shipped since late November remained in transit, with 27 shipments (1.83mmt) still lacking confirmed destinations within the Pacific and Atlantic Basins. We are currently expecting c. 27pct (0.50mmt) of in-transit US LNG to arrive at destinations throughout the Atlantic Basin and Europe. At the same time, with no shipments currently earmarked for the Middle East, the Pacific Basin is expecting the remaining 73pct (2.68mmt) of in-transit LNG, with 1.99mmt currently headed for the Far East. Our LNG Market Tracker indicates there are seven US LNG shipments still to arrive in China, amounting to 0.47mmt. We are anticipating their arrivals by 21st January. U.S. cargoes en route to China thus exceeded those headed for Japan by 27th January by a slight margin of 0.04mmt.

 

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