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Rates for LNG carriers soar into record territory

Rates for LNG carriers have soared to record highs of $200,000 a day this week with plenty of analysts suggesting the bullrun could last for a number of months.

The sector, which has only relatively recently seen spot fixing, is now seeing headline average rates of $170,000 a day in Asia Pacific, up 20% in the past fortnight, according to Jeffries, while LNG carriers in the Atlantic are commanding around $140,000 a day. This compares to an average of around $80,000 to $85,000 a day in both basins at the end of last year, according to the International Gas Union.

Rising demand from Asia, led by China, and growing ton-miles have stretched the LNG fleet in the past few months.

“Demand is set to easily outpace supply growth (new ships) until at least 2021,” Value Investor’s Edge predicted in September.

“We expect tonne mile trade in LNG to grow by 12.9% in 2018 – supported by strong US and Australian exports –  with the fleet expected to grow by 10.6%,” Stephen Gordon, managing director of Clarkson Research told Splash today. Clarkson Research data shows the overall LNG fleet is now up to 546 vessels of 80.7m cu m with an orderbook of 121 vessels of 18.6m cu m, equivalent to 23% of the fleet.

Splash readers reckon the current bullrun has legs. In an ongoing survey called MarPoll carried on this site, Splash voters believe LNG will be the best performing sector in 2019. Dry bulk is viewed as the second best performer next year.

“The LNG utilisation looks quite tight at the moment and with multiple US Gulf liquefaction trains coming online and trades to the Far East increasing rapidly, the ton-mile increase will put significant pressure to the upside,” one reader commented.

“Fleet growth will taper off in the next few years while volumes and ton miles will continue to grow which means the shipping capacity will only get tighter,” concurred Oystein Kalleklev, CEO and CFO at Norwegian major gas carrier owner, Flex LNG, in conversation with Splash today.


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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