Charter rates for LNG carriers in 2022 will be down on those seen during the previous 12 months in a market that will be dominated by high gas prices and tight supply, according to shipbroker and consultant Poten & Partners.
Speaking in a first webinar for the year, Poten forecasting manager Kristen Holmquist said the brokerage is expecting LNG shipping rates to be closer to those seen in 2020.
A graph shown in the presentation shows rates just tipping over the $100,000 per day mark in November and December.
But she added that there could be some upsides for them associated with Panama Canal delays.
Volatility and tightness
Holmquist was giving a broad-brush view on the outlook for the LNG market in 2022, where she said volatility and market tightness will continue this year with natural gas prices remaining high.
She said global demand growth will be slow in 2022 due to high natural gas prices and limited LNG supply.
Global LNG imports are hitting record levels, she said but the market is "maxed out" on what it can achieve in terms of total production.
She said US feed gas for liquefaction plants is already at record heights. LNG production there was higher than that recorded both in Australia and Qatar during 2021, but output in all three countries was up on that recorded for 2020. Elsewhere she described it as "pretty flat".
Holmquist said Europe did not build back its natural gas storage in 2021 as Asia was buying aggressively and Russian pipeline flows were low.
Europe starts 2022 at 26% below the average storage rate.
Poten forecasts European demand for the winter period from October 2021 to March 2022 will be 51m tonnes, up on 38m tonnes a year earlier and closer to 52m tonnes recorded for the winter of 2019-2020.
In contrast, the company sees a lower demand focus for north-east Asia at 111m tonnes for this winter period compared to the 117m tonnes logged for the same six months in 2020-2021.
Holmquist said that in the next six months it will be "tough" to try and rebalance the markets by demand destruction in other regions.
Supply squeeze
She was not optimistic about the situation being eased by additional LNG supply, saying this is already pushed as high as it can go.
Holmquist said Poten sees LNG supply growing by 13.5m tonnes in 2022 with the US contributing 5m tonnes to this figure. But she said to get to this figure will require some producers to solve their production issues and everything to right for new projects.
"There is not a lot of additional LNG that we can squeeze out of the global infrastructure," she said.
The Poten forecaster proved equally downbeat on 2023 where she sees less than 10m tonnes of LNG supply growth and said the market would only start to see significant new volumes come onstream from 2024 to 2025.
