In a landscape where every shipping industry is taking its moment of focus, liquefied natural gas (LNG) tankers are at their peak, informes GCaptain, stating that, daily bookings greater than $200,000/day for modern TFDE/DFDE vessels are now reported in brokers’ market reports, with “state-of-the-art” two-stroke MEGI/XDF vessels pegged at numbers greater than $ 300,000 / day.
For comparison, a recent Evercore ISI research report, citing data from Clarksons, estimated the late September 2022 spot time charter rental for TFDE vessels (with 160 cumtr cargo capacities) at $207,500 /day, compared to $137,500/day in mid-September 2022, and just above $68,000/day in August 2022.
Background
Facing sanctions on gas supplies from Russia, Europe has been building up reserves, apparently ahead of next winter. However, recent concerns about submarine leaks and possible sabotage of Nord Stream pipelines are putting new eyes on gas transportation.
Jefferies transportation analyst Omar Nokta wrote: “LNG spot shipping rates continue to rise following reported leaks from the Nord Stream pipeline (the pipeline sends Russian natural gas to Germany). As is still the case, poor vessel availability is driving rates to high levels.”
Stifel transportation stock analyst Ben Nolan reports that: “European buyers have also been buying LNG and keeping ships with the LNG on board to sell later in the year as the weather turns colder and inventory withdrawals begin to occur. The effect is to absorb the capacity of the ships, which makes transport rates go up.” He also noted that the vessels have been withdrawn from commerce for use as FSRUs (floating storage and regasification units).
Emily McClain, vice president of Rystad Energy, leading industry analysts, said in a market report: “Gasoline prices appear like a leaf in the wind, with little indication of how far they will go and in which direction.” Explaining the complicated dynamics of the commodity market, their report added: “Earlier this week, gas prices in Europe fell to almost $50 per MMBtu due to high storage levels by more than 87%, but increased rapidly with the news of the damage. to both Nord Stream gas pipelines. We can’t expect prices to drop any time soon, at least not until we see some sort of improvement in supply.”
Molecule prices in Europe had risen above $100 in early summer 2022 before falling back.
Regarding LNG shipping, Rystad’s McClain reiterated the shipping analysts’ message, writing that: “Liquefied natural gas (LNG) carrier rates have been on the rise as buyers rush to secure LNG carriers. LNG volumes earlier this year given the uncertainty in global gas. Northern Hemisphere winter supplies and prospects.
For trade flows, geopolitics is a big driver. Reuters reporters, using Refinitiv Eikon data, said: “The US has increased overall LNG shipping over the past 12 months, with more ships going to Europe because of the continent’s need for more gas as Russia cuts supply”. US exports are still lagging, due to an explosion in early June at the Freeport LNG facility; the LNG cargo seller expects to be close to its early 2022 export levels by November.
Among the public companies in the shipping sector, another Master Limited Partnership (MLP), Höegh LNG Partners LP (which had been listed on the New York Stock Exchange as “HMLP” and was active in supplying FSRU capacity) brought in private parent, Höegh LNG Holdings Ltd. This follows a trend where other listed MLPs, those linked to Golar LNG and Teekay LNG, were also taken private.
GasLog Partners LP (NYSE: “GLOP”), linked to Ceres Hellenic Group (P. Livanos) remains public, although its sister company GasLog Ltd (the general partner of the public entity) was privatized in early 2021. Another MLP, Dynagas LNG Partners (linked to Prokopiou) also continues to trade under the symbol “DLNG” on the New York Stock Exchange.
Source: Barry Parker from GCaptain
