The next two years are shaping up to be good ones for LNG carrier owners before newbuildings catch up with the market, Evercore's Jonathan Chappell said on a conference call Wednesday.
With more LNG projects coming on line in the next few years, spot rates for 2019 and 2020 will be between $85,000 per day and $90,000 per day, he predicted — rates "incredibly profitable for the shipowners."
But by 2021, Chappell estimated the market would be over capacity, with more than 110 ships expected to be delivered over the next three years.
In November, the LNG carrier spot market had shot up to nearly $200,000 per day. By mid-December, the market had fallen, but ships were still fetching per-day rates around $150,000. January saw rates fall under the six figure mark.
But seven new LNG projects are set for completion this year and eight more next year, which should mean continued favorable rates.
The emergence of a spot market for LNG carriers is a new phenomenon in the sector, said Chappell, who picked GasLog as the proxy for spot rates.
Previously, ships would be fixed on 20 to 25 year contracts, but the last two decades have seen the industry transform, he said.
"[Lately, we've seen] more shorter-term contracts, and even a spot market developing," said Chappell, who also tipped Golar LNG as a top pick. "A lot of traders are getting involved."
