Charterers who took LNG carriers on one-year deals this year could move to take up extension options in 2022 to cover their shipping risk, according to shipbroker Fearnley LNG.
Speaking in one of the company's LNG shipping updates, advisor for LNG shipping & renewable Ina Arneson said the division of broking giant Fearnleys expects to see a milder transition in demand for LNG shipping than is normally seen as the market moves into the fourth quarter.
She said Europe will "put up a fight" for cargoes against competing Asian buyers, at least for the first part of winter.
While more cargoes might go to Europe resulting in shorter sailing distances, she said this lower fleet utilisation may not be reflected in availability as charterers might not want to risk sub-letting vessels.
Arneson said that, with the low number of newbuilding deliveries next year and 2023 being a year of regulatory uncertainty, charterers might repeat this year's strategy and secure shipping coverage by extending their one year deals.
Tight cargo market
The analyst said the LNG market is currently witnessing "classic winter behaviour" with rising rates.
She said that while the year-on-year growth of LNG exports is positive there is still not enough to cover demand, particularly with the supply disruptions at several liquefaction plants.
Arneson highlighted that so far this year has seen a decrease in the number of fixtures but an increase in number of fixed days.
She said that to date in 2021 the carrier fleet has grown by 45 vessels with more likely to be added extending this number to an expected record number of 55 deliveries.
On the newbuilding side, 55 vessels have been ordered this year.
She said the rise in newbuilding prices have pushed some shipowners to firm up their option as these were locked in at cheaper prices, so there has been an increase in the number of speculative orders without contracts.
Arneson said Fearnleys expects to see even more as there are still LNG projects missing shipping coverage and fleet renewal is on the agenda for many.