LNG shipping prices have been under pressure since September. LNG tanker charter rates have fallen from $70,000 to $20,000/d over the past two months. Some shipowners are considering decommissioning the ships. In particular, an excess supply while 52 ships were delivered this year.
Spot prices for LNG shipping and time charter rates for LNG carriers have fallen to historically low levels in recent days, for example around $20,250 per day for a 174,000 m LNG carrier.3by far the lowest level on record, according to Clarksons Research. According to investment bank Jefferies, LNG shipping prices are subject to a “ extreme pressure » since September. Rates for two-stroke vessels have fallen from $70,000 to $20,000/d in the past two months. Some shipowners would consider decommissioning the ships.
Waiting for winter
The sector is still feeling the impact of a slow start to winter, which is typically its peak season. Transportation demand was also limited due to a shallow contango market structure providing no incentive for floating storage in Europe at the start of the winter season. Lower than expected temperatures in Europe, extended maintenance periods in Norwegian gas fields and faster withdrawals from underground gas storages strengthened European spot prices in recent weeks, keeping arbitrage between basins closed.
Also, the strong growth of the fleet is not helping the market. Some fifty-two new LNG carriers have joined the fleet since the start of the year, almost double the number of deliveries during the same period last year. On the other hand, new liquefaction capacities have been limited, with only 5.8 Mt per year in 2024.
Drop in average speeds
According to analyst Vortexa, “ excess vessel availability is evidenced by a drop in average fleet speeds at the start of the winter season “. Speeds typically increase in peak seasons, when LNG storage begins for European and Asian markets. This year, the weekly ballast average fell 1% between mid-September and November, while it was up 5% during the same period in the previous two years.
No inevitability, according to Vortexa, demand should arise due to the rise of American liquefaction projects and a larger share of American exports to Asian markets than in recent years. “ This will improve ton-mile demand on the fleet, especially as U.S. cargoes are forced into longer voyages to the Pacific Basin.e”, carriers avoiding the Panama Canal as geopolitical tensions impact Red Sea transits via the Suez Canal.
The imbalance between supply and demand should, however, worsen and maintain pressure on freight rates. 89 additional ships are to be delivered in 2025.
Adeline Descamps
