LNG News Editor
There is an enormous divide in charter rates in discussions for liquefied natural gas carriers up until September 2023 compared with October to December.
“Winter is clearly still expected to be very strong and the lack of shipping to cover that period is a demonstration of the unpredictability and uncertainty when it comes to what the rates may end up being,” according to the monthly LNG shipping report for April from London shipbrokers Simpson Spence Young (SSY).
Charter aims
“There remains, however a fundamental lack of independent length and should the market turn a bullish corner on the cargo side, much may change rapidly this summer,” SSY explained.
The brokerage noted that the months March and April in LNG shipping have historically often been “very tricky patches to navigate” if you have open tonnage, but the belief in a stronger second half of the year has not completely waned.
“Notably, every single period and type of ship today is trading at a premium versus this time 12 months ago. Spot, Term, East and West, 2 stroke, Steam is all better than in March 2022,” SSY stated.
“The long-term market also showed no sign of slowing as a European utility locked in two ten-year deals at record-breaking levels before the agreement fell through. However interest around the re-opened units resumed instantly,” added the report.
The SSY report also mentioned that the start of April was marked by the first ever “IE” week.
The report explained that International Energy week has replaced its predecessor International Petroleum week as the oil tanker market, and increasingly the LNG market, descended upon London to share thoughts and socialise.
“Following a slow week owing to this and a lethargic half-term period the market picked up again with several spot fixtures across both basins,” SSY said.
The report added that free-on-board tenders were hotly competed out of Egypt and Oman with a Chinese major winning two of these in a single week.
“Despite the action, spot rates remained flat, perhaps even suffering a slight decrease on the back of spot fixtures that saw multiple ships in contention for a single cargo,” SSY said.
“The action mainly leant in the favour of the Pacific in terms of activity despite no real sign of a Chinese resurgence for LNG demand,” the broker added.
Relet owners
“Relet owners often really struggled to find a cargo that was a suitable match against their length which saw many ships sit idle until ballasting to their next commitments, particularly in the Atlantic,” the report said.
The markets was summarised by the last EGAS FOB tender in Egypt being awarded to a player with their own shipping, reflecting ample length in the market and saw lower and lower rates being shown for sub-tender shipping awards.
“April at times felt barren of cargoes and May, despite being a bit beyond the fixing window, gave similar ominous signs,” SSY stated.
“The West to East arbitrage remained firmly shut, as commodity prices continued their downward trajectory. This resulted in the market continuing to being notably ‘intra’ basin,” said the report.
The primary and most interesting action remains, as has often been the narrative, on the multi-month and term market.
The report explained that a steam requirement in the Middle East was covered on a European Owner’s steam vessel for 70-plus up to 30 days at relatively healthy levels, pointing to the certain premium that Middle East loadings frequently command and showing the older ships still have a role to play for certain trades.
“A different steam vessel was also fixed for a 12-month charter to a European energy major with delivery down the line in the late third quarter,” SSY said.
Indian major
“An Indian oil major quoted the market for around 10 months after failing to get a vessel earlier in the year for 12 months. This kind of period has been fixed away in a plentiful amount this year, both from independent and relet owners, but in this instance the levels being shown seemed to have stalled progress for the charterers as they soon reverted back to quoting on a spot basis again,” said the report.
