Time-charter rates for LNG carriers are starting to fall away as those for spot charters continue to plummet in a deathly quiet market.
Brokers said charterers looking at near-term deliveries are holding back from taking any position on period fixtures as they can simply charter-in a vessel cheaply from the spot market.
They said those with requirements for tonnage to replace redelivering vessels are prepared to sit back and let the market sink further before moving in to pick off tonnage.
This week, market players indicated that Gail (India) has fixed a large two-stroke LNG carrier as a relet from energy major Shell for three months from January at a rate in the $30,000 per day range.
Brokers said the rate achieved by Gail puts levels for tri-fuel diesel-electric (TFDE) LNG carriers below the $30,000 per day mark.
Shipbroker Affinity LNG was reporting six-month rates for modern two-stroke LNG tonnage at about $36,700 per day and one-year hire at about the $50,000 per day mark, down over $10,000 per day and $6,000 from a week ago.
One broker said: “Charterers feel there is plenty of choice,” indicating that owners of TFDE ships are starting to show some resistance.
Several market participants have commented on how quiet the market, is with little fixture activity to benchmark anything against, and said that with so little concluded business, this leaves rate assessments as somewhat theoretical.
They said the downward pressure on rates is continuing with charterers pushing for further discounts beyond what they had already suggested they might take.
“The goalposts are constantly changing,” one shipbroker said.
On a positive note, for the longer-term period market, brokers said several owners have been shortlisted for Japanese utility Tokyo Gas’ requirement for two LNG carriers to take on 15-year charters for delivery from 2025 to 2027. Second-round offers were requested with validity through to 1 November.
They commented that while the near term market is looking weak through 2025, the situation is expected to turn in 2026 and into 2027 as more LNG comes online.
The spot market for LNG carriers has dropped spectacularly at what is usually the busiest time of year for vessels and when rates have hit steamy six-figure levels.
This week those in the sector spoke of “the disaster in the LNG spot market”, while another 1980s film fan commenting: “It feels a bit like the Abyss.”
The bulk of LNG tonnage remains in the hands of the portfolio players who are able to charter out ships at relets at exceptionally low levels to keep them moving.
But at the heart of this year's slowdown is the dearth of cargoes, and weak demand both in Europe and Asia.
Market watchers also point to the newbuilding deliveries from yards which are coming in advance of the projects they were contracted to serve. But in particular they highlighted the case of LNG buyers who ordered tonnage to lift the volumes they signed up to buy from Venture Global LNG in the US.
Venture Global is embroiled in legal battles and rows with its offtakers its from Calcasieu Pass LNG after the US liquefaction developer refused to start the supply under their sales-and-purchase agreements until the facility achieves commercial operations. Instead it has been selling the cargoes on the spot market.
Shipbuilders are scheduled to deliver around 80 LNG newbuildings in both 2025 and 2026.
