Spot charter rates for LNG carriers have softened in the first week of New Year as exceptionally mild winter conditions prevail across northern Europe but time-charter interest for vessels remains strong.
Spark Commodities dropped its spot rate assessment for a tri-fuel diesel-electric vessel trading in the Atlantic region by $8,750 per day to $133,750 per day. Its Pacific rate assessment was down $4000 per day to $144,500 per day.
On Tuesday, the Baltic Exchange pushed down its Atlantic rate assessment by 8.6% to $145,283 per day.
But brokers are reporting continuing strong interest in term charter activity with rumours of at least two more newbuildings fixed out at very strong levels starting to filter out.
Fearnley LNG said that while more ships are being offered for subletting charterers are issuing enquiries, declaring this “a positive sign for spot fixtures”.
“The demand for LNG vessels remains firm, with long-term charters being secured in anticipation of increased energy demand amid geopolitical tensions around the world,” the broker said.
Gas prices were already falling at the end of 2022 on the back of unseasonably warm temperatures in Europe. But the drop has continued into the New Year.
Attention is focused on China as it reopens after its long Covid lockdowns and any signs of increased demand from Asia which would add to tonne-mile length for LNG shipping.
In 2022, some 68% of all US LNG cargoes were delivered to Europe, up from about 30% a year earlier, as the region paid up to secure volumes to replace Russian pipeline gas.
But the year ahead is riven with uncertainties, not least on the slowing of the world economy and overall world trade growth across all sectors with Clarksons Research forecasting this at only 1.4% in 2023,
Shipbroker Affinity has been taking stock of 2022 for LNG shipping.
The broker said the average rate assessment for a two-stroke vessel last year was $143,000 a day which was 29% up on the figure for 2021.
It added that the average premium for a 174,000-cbm two-stroke vessel with a cargo boil-off rate of 0.085% per day has doubled in each of the past two years, coming in at around $38,000 per day for 2022.
“High gas prices have disproportionately driven appetite for more efficient and, crucially, lower boil-off ships,” the company said.
Affinity LNG said the number of spot fixtures recorded in 2022 fell to 247 compared to 354 in 2021.
But the number of term fixtures, particularly those for longer periods, rose.
The broker logged 177 long-term fixtures for periods of over 30 months, against 110 that were recorded in 2021.
Affinity reported 93 fixtures for periods of between three and 30 months compared with 90 in 2021.
The broker also commented on the record tally of LNG newbuildings — which TradeWinds’ data now records at 171 following the addition of another six vessels before the year ended.
Affinity said the numbers “far exceeded the tally for any previous year despite record high newbuilding prices.
“Long-planned project orders, fresh long-term demand for new SPAs [sale-and-purchase agreements] and speculative ordering have all added to the order count,” the company said.