LNG freight rates fell to historic lows in the week ended 23rd January, in both the Atlantic and Pacific basins, as ship numbers built up, due to the limited availability of cargo.
Last week, tri-fuel diesel electric (TFDE) LNGC rates fell much faster than their 2-stroke equivalents, as charterers had no need to opt for TFDEs, with 2-strokes being so cheap.
"I doubt anyone would pay $8,000 per day for a TFDE if you can get a 2-stroke for $9,000-$10,000 per day," a shipbroker said, talking with S&P Global.
Platts, part of S&P Global Commodity Insights, assessed the Atlantic TFDE day rate at $6,500 last Thursday, down $9,500 on the week, an all-time low, with a ballast bonus of 80%.
Asia/Pacific TFDE day rates were assessed at $8,000, with a ballast bonus of 100%, dropping $4,500 per day over the week.
However, 2-stroke LNGC rates also fell last week, due to the severe oversupply of tonnage and the very little uncontracted cargoes available.
Platts assessed Atlantic 2-stroke LNGC day rates at $10,000 last week, with a ballast bonus of 80%. This was a drop of $15,000 per day on the week, while Asia/Pacific 2-stroke day rates were at $15,000 with a ballast bonus of 100%, down $7,000 per day over the week.
"Rates will be like this for a week or two I think... with 2-strokes below $20,000s per day TFDEs are basically out of the market," a shipbroker added.
"Too many newbuilds entered the market... And there's no arbitrage, no contango, and no real demand from China/Japan," another shipbroker said, when asked about the main reasons for the oversupply of available carriers and the lack of cargoes.
Little demand in the East further exacerbated the oversupply problem and contributed to the falling rates and struggling market in general.
This could lead to an increase in LNGC layups and recyclings, sources said.
