Dearth of spot ships leads to rate boom

Thursday, 25 November 2021
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The current high gas prices are to remain for the rest of this year and beyond.

If the winter is cold as forecast, then a knock-on effect into 2022 will be seen, particularly in the term market, said broker Simpson Spence Young (SSY) in its November report.

This month’s spot market was active. During the middle of the month, nearly 10 spot fixtures were reported in a few days and freight rates rose to even higher levels.

For example, Asia/Pacific LNG shipping rates surged to an all-time high of around $300,000 per day during the middle of the month for a standard LNGC, as vessel demand outpaced tight ship supply in the region, ahead of peak winter season, S&P Global Platts reported.

Atlantic LNG shipping rates also surged to around $245,000 per day last week.

High offers

Charterers who have LNG shipping requirements for end-December loading in the Pacific received offers above $300,000 per day with a ballast bonus covering the fuel and hire cost of the vessel to be redelivered to its next load port. The offers came from trading houses.

In mid-October, the volume of LNG cargoes on the water had hit a new record high, above the five-year average level, due to a steep contango in LNG price structure that saw the October/November JKM spread at nearly $14 per MMBtu.

This led traders to book more vessels and will likely lead to a surge in demand for LNGCs that are due to return to the spot market, Platts said.

The lack of ships is compounded by the Panama Canal delays where the waiting time for vessels with unreserved slots has risen to around 10-15 days, according to brokers.

What became increasingly clear by the end of the month was how tight the shipping market had become, SSY added.

A handful of relets remained available but most disappeared, due to the increasing urgency to conclude a charter, as December cargoes were covered for the winter.

The overall tightness even resulted in a charterer re-tendering for an early/mid-December US Gulf lifting requirement.

Constant market volatility, with Russian commitments to increase gas supplies to Europe, despite problems with Nord Stream 2 and politics playing its part, continued to see TTF and JKM see-saw.

The LNG market will have about 22 mill tonnes per annum of new capacity volume coming online next year, with only 25 new ships being delivered, SSY said. 

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