Spot charter rates for LNG carriers have made a dramatic U-turn, falling from recent highs in the wake of the outage at Texas’ Freeport LNG plant, but the volume of enquiry in the market is leading some players to suggest levels could rise again soon.
Fearnley LNG reported that spot rates for modern two-stroke LNG carriers trading in the Atlantic basin region fell almost $45,000 per day to around $90,000 per day.
Spot rates for tri-fuel diesel-electric vessels plummeted $36,000 per day to $60,000 per day.
Term charter rates also softened slightly.
Brokers cited the raft of vessels that had been due to load at Freeport LNG but that have since been offered out for charter as responsible for the sudden market softening.
Companies including TotalEnergies, BP, Osaka Gas, JERA and SK E&S are among those with contracts on Freeport LNG volumes.
A statement from Freeport LNG on Tuesday, in which the liquefaction company said it would only be able to resume partial operations in 90 days, with a return to full production not expected until late 2022 following a fire at its plant on 8 June, sent the markets into a tailspin.
Prior to this, a three-week outage of Freeport’s production had been expected, with the loss of 12 to 13 cargoes.
Prices rose sharply in Europe and Asia, which are trying to restock gas inventories ahead of the winter.
The situation was exacerbated by the fall in pipeline volumes into Europe through Nord Stream 1.
But brokers pointed to the volume of enquiries in the market, for vessels in both the Atlantic and Pacific basins, as charterers seek cover over the normally busy winter period.
On top of this, several charterers have been moving to lock in tonnage for longer periods and, prior to the Freeport fire, had been moving quietly so as not to prompt further rate rises.
One broker suggested the current length in the LNG carrier market could be “short-lived”.
“The market remains structurally tight and the prompt discount vanishes for later deliveries,” Fearnley LNG said.
