BAKU, Azerbaijan, Oct.27
By Leman Zeynalova – Trend:
Sentiment in the liquefied natural gas shipping spot market turned bearish abruptly in the first half of September due to supply disruptions, and while values are still expected to rise gradually over Q4 they are unlikely to reach 2019 levels due to a lack of bullish news and low prices for LNG, Trend reports citing S & P Global Platts.
“ LNG spot shipping is near three-year lows. The Atlantic and Pacific shipping rates averaged $40,000/day and $35,000/ day respectively from July 1 to Sept. 11, close to levels last seen in 2017 when they were $39,000/day and $38,000/day respectively. The low shipping rates mirror the LNG cargo market, where the JKM, the benchmark price for LNG, is in the low-$3s/MMBtu level.
“The final quarter is usually a period when LNG shipping prices are at their highest, in line with the cargo market. The Atlantic and Pacific LNG shipping rates averaged $105,000/ day over Q4 2019, compared with an average of $64,000/ day over Q3 that year, an increase of 71 percent. Several chartering sources said spot shipping rates were unlikely to reach six figures as they did last year.
“If things don’t change we won’t get to six figures as there is no bullish news, but things can change quickly given thin supply in the Atlantic,” said a charterer. CNOOC was heard to have cancelled a vessel requirement starting early November for a charter of 65-85 days due to excessively high offers, with average levels offered around the $70,000s/day, a shipbroker said.
“When asked how Q4 LNG shipping will go this year, a shipbroker answered “It’s going to be OK. Not crazy but the market will increase gradually.” Despite the low Q3 2020 average shipping numbers, Atlantic and Pacific shipping rates did increase from mid-August: from $40,000/day and $35,000/day respectively on Aug. 14 to $55,000/day and $47,000/day by Sept. 2.
“However, since then, the Atlantic shipping rate had been assessed lower at $50,000/day on the back of uncertainty due to production problems at the Cameron facility in the US Gulf due to Hurricane Laura which hit the region late August. The Pacific shipping rate has also fallen to $46,000/ day as Chevron pushed back the completion of repairs at the Gorgon LNG plant from early September to October. “Sentiment was bullish running into September but an unfortunate hurricane in the US Gulf turned sentiment,” said a shipowner source.
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