Shipowner Teekay LNG is anticipating a fresh surge in time-charter business towards the end of this year based on the volume of enquiry in the market.
Speaking on a second-quarter results briefing, Teekay Gas Group president and chief executive Mark Kremin said there was an “almost unprecedented amount” of term-charter interest for the start of 2022.
He said this ranges across periods of three to 10 years and includes buyers from Europe to Asia.
Charterers moving
Kremin said the counter-seasonal strength in the LNG market was linked to an uptick in term charters, which had seen 13 fixed in March, 10 in April and eight in June.
He said this three-month total equals the number of term charters completed over the last 20 months combined.
The chief said Teekay believes this is a result of charterers moving to lock in vessels early to avoid the rate spikes seen over last winter.
“I think we will see more term charters get fixed by the market in Q4 and certainly Q1," he said. "We can currently see [a] half dozen term-charter requirements for next year.”
An increase in project start-ups, low inventories and long-haul trades from the US to Asia are coming together to fundamentally support spot and term LNG carrier rates, Kremin said.
He revealed that the first Teekay ship to come off-hire is the 138,000-cbm steam turbine vessel Excalibur (built 2002), which is due to redeliver around Christmas or early in 2022. He said the company is likely to compete with others to find a project for the LNG carrier, which it co-owns with Exmar.
He said the next vessel is scheduled for redelivery around February, without naming it.
“Given the interest we are seeing right now I can possibly see us fixing forward,” he said. “If the iron’s hot, we will go forward.”
But he added that if the market is not there that is also fine, given the current coverage for the company’s fleet. “We don’t need to jump at any charter,” he said.
Newbuilding preference
Answering analysts’ questions, Kremin said the company is open to fixing at floating rates but he said its preference is for fixed rates.
He said the company is happy with its owned fleet.
Kremin said it does look at opportunities for its partially-owned fleet but what is available in the market does not come with long-term contracts.
“We are not married to any piece of steel,” he said. But added that at the moment the company is not seeing any opportunities to consolidate.
Kremin said it is more about the value of contracts rather than the steel.
He said its focus has been on deleveraging. When asked about growth for the company, Kremin said Teekay is more focused on newbuildings as these would likely deliver in 2024 to 2025 when it will have have achieved this.
