Charter rates for LNG carriers have slumped further as open tonnage starts to stack up in the Pacific Basin and chartering action slows.
Brokers said that while there had been little done to benchmark levels, spot rates for modern gas-injection vessels were in the $40,000-per-day range for vessels trading in the Pacific basin where the greatest volume of tonnage is showing as open.
In the Atlantic basin levels had been holding at over $50,000 per day but are expected to slip below this on upcoming fixtures as charterers take their pick from the growing number of available ships.
The Baltic Exchange spot assessments for tri-fuel diesel-electric vessels slipped back further on Tuesday with the US Gulf to Japan route falling $5,803 per day to $36,411 per day and the US Gulf to UK continent route down $5,196 per day to $40,131 per day.
Cargo cancellations
Brokers cited the recent cold snap in the US as one of the reasons for the tonnage build up. This resulted in between seven and 10 cargoes being cancelled as producers diverted planned exports to meet domestic demand.
Action also slowed over the Chinese Lunar New Year holidays earlier this month.
Shipbroker Affinity (Shipping) said there are about 70 vessels available in the next 30 days, while others put the figure at closer to 50 ships.
Brokers said that on balance the market is in roughly the same position it was last year.
But the difference for 2021 is that the cold winter sent demand for tonnage and charter rates up sharply into January which had led to expectations that levels would remain stronger for longer.
The Pacific is awash with ships, and they are getting warm. Cargoes are being fiercely contested
Braemar ACM
One pointed out that in reality, daily LNG spot charter rates have crashed from $200,000 to around the $40,000 mark in just three to four weeks.
Rethink
At the end of last week, shipbroker Braemar ACM revised its market view.
“The Pacific is awash with ships, and they are getting warm. Cargoes are being fiercely contested,” the broker said.
It blamed the US Polar Vortex which sent temperatures in Texas plummeting to Arctic levels this month, which disrupted load schedules creating a backlog for the coming weeks.
The broker said that while it expects charter rates to drop in the coming months — “we did not expect them to plummet as sharply”.
Braemar ACM flagged up the sharp increase in spot available tonnage saying it expects this trend to extend through the next two quarters before recovering for the winter market towards the end of the third quarter.
