Spot rates for LNG carriers continue to soar to new highs. The Baltic Exchange has rates as high as $450,000 a day, while Spark Commodities reports fixtures in the Atlantic at $425,000 a day, with many analysts suggesting the half a million dollars a day mark could be reached this month.
Average spot rates for a 160,000 cu m DFDE unit hit a fresh all-time high of $396,250 a day last Friday according to Clarksons Research, amid continued limited tonnage availability in both the Atlantic and Pacific, whilst average spot rates for steam turbine vessels rose by 4% to $240,000 a day. Rates continued to climb today.
Prior to 2021 the all-time high spot LNG rate was close to $200,000 a day, a record that has since been broken on multiple occasions.
LNG rates are now up by more than 500% in the year to date in the hugely altered global energy map following Russia’s invasion of Ukraine.
“The International Energy Agency predicts that this year’s worldwide LNG export capacity expansions will be more than doubled by Europe’s increased LNG imports, which will keep short-to-medium-term LNG trade under intense pressure,” a recent report from brokers Affinity suggested.
“There remains very few spot ships with flexibility in the near-term,” a recent report from Jefferies pointed out.
Floating storage levels in LNG shipping are at all time high levels with slightly more than 2.5m tonnes tied up in floating storage, according to Oystein Kalleklev, the CEO of Flex LNG and executive chairman Avance Gas. This equates to around 35 ships.
The drivers for floating storage are two-fold, Kalleklev explained in a LinkedIn update today. First, congestion in Europe where there is not enough regasification capacity for the glut of LNG carriers arriving, and secondly contango in gas prices.
“With China today stating that Chinese energy companies should reduce re-selling of cargoes to Europe to ensure gas supply we could possibly see less floating storage but increased ton mileage as more ships head to Asia,” Kalleklev suggested.