LNG carrier rates continue to plumb new all-time depths in a market described as heavily oversupplied.
According to shipbroker Fearnleys, there is a lot of competition for uncovered requirements in the Atlantic.
A slight gain in rates last week was “eradicated in no time”, the Oslo shop said.
Investment bank Fearnley Securities noted that in the Pacific, there is a continued flow of requirements with charter rates for modern tonnage aligning with those in the West.
Spot rates for TFDE ships were $15,000 per day on Wednesday, down 49% from last month.
They have plunged from $85,000 in the summer.
Clarksons Research said there was continued weakness in the spot sector, despite signs of an uptick in activity.
The average spot assessment for a two-stroke, 174,000-cbm vessel was down 3% week on week to $29,000 per day, a fresh record low.
Fearnleys said there will be discussions about laying older ships up or scrapping them, following on from South Korea’s SK Shipping deciding to demolish four 25-year-old steam turbine vessels this month.
‘Trickle’ of scrap deals?
This is likely to be the start of a “trickle” of such deals, rather than a surge, the broker believes.
However, the prospects of long-term lay-up and the evolving regulatory framework making older tonnage less attractive could accelerate such decisions, it added.
At least five LNG carriers have diverted from Asia to Europe this week as gas prices rose because Russia’s Gazprom halted supplies to OMV in Austria.
The benchmark front-month contract at the Dutch TTF hub was trading at €46 ($48.60) per megawatt hour on Monday, or $14.49 per MMBtu, the highest level since November 2023.
The Asian benchmark Japan Korea Marker (JKM) was $14 per MMBtu, LSEG data showed.
Gazprom stopped deliveries to Austria’s top importer on Saturday after OMV threatened to impound some of the Russian state firm’s gas in compensation for an arbitration it had won over a contractual dispute, Reuters reported.
Fearnley Securities said the spike in European gas prices paints a challenging picture for LNG freight, as current LNG prices make Europe the premium destination for US LNG, rather than Asia.
“Also, with gas prices driven higher on the back of a larger risk premium, there is a lack of contango [forward prices higher than spot] that otherwise supports tonne-time,” analysts added.
Clarksons Securities said LNG carrier owners saw notable gains in their stock prices last week, supported by the short-lived rally in rates.
John Fredriksen’s Flex LNG rose 9.5% and Idan Ofer’s Cool Company increased 5%.
