London shipbroker gives April overview of the many current charter challenges in LNG shipping market
There is an enormous divide in charter rates in discussions for liquefied natural gas carriers up until September 2023 compared with October to December.
London brokers report 40 spot LNG carrier fixtures and 19 at multi-month-plus in partial March recovery
Shipping brokers in the London market reported 40 spot LNG carrier fixtures and 19 multi-month-plus fixtures in the month of March with a marked improvement in the second half amid the anticipated seasonal lull.
“The average rates for tri-fuel, diesel-electric (TFDE) vessel fixtures recorded in the first two weeks of March were in the mid-high $20s with ballast bonus to hub with the Pacific seeing fixtures even below that,” said the monthly LNG charter market report from brokers Simpson, Spence and Young of London.
“These levels further pronounced the dramatic drop the market experienced from the dizzying highs of January and early February,” added the report.
“Yet, amidst the weakening rates and economics, the market maintained a healthy level of activity with more than 40 spot and 19 multi-month-plus fixtures being recorded,” stated Simpson, Spence and Young.
The report noted that towards the end of the month, Far East gas prices recovered on the back of early restocking efforts from regional buyers.
“This opened the arbitrage for April liftings selling into May and June JKM and therefore numerous prompt requirements surfaced,” explained the report.
“This resulted in the last week of the month seeing owners capture round trip econs in the Atlantic and numerous vessels ballasting West in search of the premium market,” it added.
“This in turn tightened the Pacific which also gradually saw improved rates and economics for owners,” said the report.
With the 19 term fixtures recorded in March, the brokers stated that this was the busiest month in quite some time on the multi-month-multiyear front.
“From a structural perspective, many of these fixtures were for a firm period of one-year with an option for one more,” said the report.
“Charterers were incentivised to fix at cycle lows for 1-3 year period while some of them await their newbuilding orders inked for delivery in 2022 and 2023,” it added.
The report added that four new offtake contracts were signed in March. The first involved China’s Shenergy Group and Russia’s Novatek Gas & Power Asia for 3 million tonnes per annum over 15 years.
Novatek signed an additional firm contract with Spain’s Repsol for the sale of LNG from the future Arctic LNG II project. The company intends to supply 1 MTPA over 15 years.
Qatar Petroleum signed a deal with Pakistan State Oil to provide up to 3 MTPA of LNG to Pakistan, commencing in 2022 and ending in 2031.
The Qataris also signed a supply deal with China’s Sinopec for 10 years and with the supply of 2 MTPA from January 2022.
On the projects front, the report said that Chevron Corp. had announced that in the second quarter of the year it would shut down Train 3 at the 15.6 MTPA Gorgon LNG plant off West Australia, for weld inspections.
The market also noted that Chevron had decided to stop funding the Kitimat LNG project in Western Canada after failing to find a buyer for its 50 percent stake.
“This may leave Shell’s 14 MTPA LNG Canada project as the country’s only large export plant to reach the construction stage,” said the report.
Charter rates rise
Dec 10 (LNGJ) - Shipping charter rates for LNG carriers in the spot market edged higher as Northern Hemisphere winter market demand increased. Rates were quoted at an average of between $112,000 per day and $118,000 per day West of Suez. The same levels of spot rates were also heard for the East of Suez charter market for vessels of between 155,000-165,000 cubic metres capacity, according to various brokers. One-year time charters were also little changed for the most modern vessels and were available for around $47,000 per day.
Spot charter rates up
Oct 29 (LNGJ) - Shipping charter rates for LNG carriers in the spot market increased over the past week by a further $20,000 per day. Rates were quoted at an average of between $100,000 per day and $110,000 per day West of Suez. The same levels of spot rates were also talked about for the East of Suez charter market for vessels of between 155,000-165,000 cubic metres capacity, according to various brokers.
Ship charter rates drop
Feb 6 (LNGJ) – Shipping charter rates for LNG carriers in the spot market dropped further in the week as winter season deliveries slowed down, adding to the market glut. Rates were quoted at an average of between $63,000 per day to $67,000 per day West of Suez and $56,000 per day to $62,000 per day East of Suez for vessels of between 155,000-165,000 cubic metres capacity, according to various brokers. One-year time charters for vessels of between 155,000-160,000 cubic metres capacity were seen at around $70,000 per day.
