Cargo buyers may be scrapping for LNG at record-high prices, but the freight market is over-supplied with ships, brokers believe.
Gas demand in Asia has continued as Japan seeks to restock inventories after a heat wave last week.
The global gas shortage is seeing Asia and Europe competing for cargoes, but the soaring cost may deter some buyers, according to Norway’s Fearnley LNG.
The narrow arbitrage from the west to Asia has also seen little reduction to sublet tonnage currently oversupplying the market, brokers said.
Prompt availability now stands at 23 vessels, up from 15 last week.
The outage at the Freeport LNG facility in Texas after a fire “also poses concerns over the next months,” Fearnley Securities analysts Oystein Vaagen, Erik Gabriel Hovi and Ulrik Mannhart said.
“But for now sub-letters are withholding additional modern tonnage in anticipation of the winter market,” they added.
Looking further ahead, the analysts see the period charter market as stable, which underscores the fundamental tightness expected over the coming years, Fearnleys believes.
TFDE ships of between 155,000 and 165,000 cbm are quoted at $50,500 per day.
This is down 7.3% in a day and 44% in a month.
Term deals firm
But one-year deals for TFDE units are holding firm at $135,000 per day, up 13% over the last month.
Cleaves Securities said MEGI vessels had fallen back 25% to $76,000 per day in the week ending 1 July, and steam turbine ships saw earnings tumble 21% to $61,000 per day.
Norwegian LNG carrier owner Flex LNG said on Wednesday that LNG product markets are “as tight as slim-fit jeans”.
The John Fredriksen-controlled shipowner said a single cargo of gas loaded in the US is worth $144m more when it arrives in markets where prices are much higher, like Europe and the US.
Cargoes can be worth up to $200m.