$300,000 a day: LNG freight rates scale new heights

The scramble to source gas from ever further distances has pushed the LNG shipping sector to new extraordinary highs.

Average spot rates for a 174,000 cu m two-stroke vessel surged by 36% week-on-week to a new record high of $297,500 a day, as of late on Friday, according to Clarksons Research.

Positioning fees are now being included in negotiations and fixtures, driving up round-trip rates with both the Atlantic and Pacific basins reporting a frenzy of fixtures.

“LNG carrier rates continue to see strong upwards momentum due to a very tight ship available list,” a recent report from Jefferies observed, adding that the sector had benefited from strong demand out of both Europe and Asia for US-origin cargoes.

According to a recent post on LinkedIn from Oystein Kalleklev, the CEO of Flex LNG, demand in Europe, Japan, South Korea, Taiwan and Thailand is expected to increase by a total of 46.6m tonnes this year with Europe accounting for 85% of this increase as the continent weens itself off Russian pipeline deliveries.

Russian gas accounted for 45% of Europe’s imports last year, with most of it coming via pipeline. With the continent likely to take no Russian gas next year, it is busy sourcing an extra 140bn cu m of gas for next year, according to McKinsey, a hole equivalent to 14% of globally traded gas volumes, and to 27% of the LNG market.

Last month 70% of all Atlantic LNG cargoes went to Europe, according to Rystad Energy, up from just 38% a year before.

“LNG term rates have risen to multi-year highs and with a European push towards energy security we now project trade in 2030 of 630m tonnes versus last year’s 380m tonnes,” a new report from Clarksons Research forecast, helping explain today’s extraordinarily large LNG newbuild orderbook, which now stands above 40% of the extant fleet.

Sam Chambers

Starting out with the Informa Group in 2000 in Hong Kong, Sam Chambers became editor of Maritime Asia magazine as well as East Asia Editor for the world’s oldest newspaper, Lloyd’s List. In 2005 he pursued a freelance career and wrote for a variety of titles including taking on the role of Asia Editor at Seatrade magazine and China correspondent for Supply Chain Asia. His work has also appeared in The Economist, The New York Times, The Sunday Times and The International Herald Tribune.
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