Shipping

Sonatrach
15.02.2021 kl 11:08 4275

Fra Arctic:

LNG – Spot falling and sentiment remains soft!
Following last week’s 30% drop, LNG carrier spot rates fell further this week. Tri-fuel and MEGI (2-stroke) spot rates were down by 24% and 27% to USD 62.5k/d and USD 72.5k/d, respectively, according to Poten. 1yr TC rates were flat from last week, with tri-fuel and MEGI (2-stroke) quoted at USD 52k/d and USD 64k/d. Rates entered the year on a strong note supported by strong gas prices and an open East-West arbitrage.

However, rates have been under pressure the past weeks as gas prices have been falling rapidly. The JKM March ’21 contract trades at USD 8..26/MMBtu, which is 2% down from last week after having dropped 40% from three weeks ago. Moreover, the average monthly contract for 2021 stands at USD 7.96/MMBtu, which is more or less flat from a week ago.

While shipping rates continue to come off rapidly in the East, prompt availability remain limited in the West. This is likely to be the case in the coming weeks as vessels continue to discharge in the East. The spot market has been subdued due to a combination of Chinese New Year and limited new cargos. Fixing continues on the term side with traders in particular moving opportunistically on new positions at competitive levels.

Rates are expected to fall further in the coming weeks as we are heading into a softer seasonal period for demand and relet players are eager to secure employment as they see the charter cargo market coming off. Available vessels for prompt delivery stands at 10x vessels (vs five last week). There is still a lack of available tonnage in the West, but availability has increased substantially in the Far East in recent weeks, and the trend is expected to continue over the next month.

Owners taking delivery of vessels in the Far East are faced with the challenge of ballasting to the West or to position for securing a new intra-pacific voyage. We should expect rates to slide in the coming weeks based on weaker seasonal demand and sliding gas prices (reflected by the futures curve).. Charterers are confident on being able to secure tonnage for next requirements given the expected tonnage build-up during March.

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