Liquefied natural gas (LNG) carriers are poised for a boost in earnings from resupply demand after cold conditions led to a supply scramble and record freight rates, one of the world’s leading LNG carrier operators has said.
The cold snap in Europe and Asia in January and in North America last month increased demand for heating, leading to higher prices in several markets, while inventories fell.
“Inventories need to be replenished due to the cold northern hemisphere winter in both Asia and Europe. So we think this is going to increase ton-miles,” GasLog Partners chief executive Paul Wogan told Reuters.
Ton-miles are an indicator of shipping demand that measures the volume of cargo carried multiplied by distance.
LNG tanker rates reached record highs of more than $320,000 per day in January, with some charters closing at around $350,000 per day, according to estimates from shipping sources.
Average earnings have fallen to around $20,000 per day on some routes, according to Baltic Exchange data.
Wogan said that despite more tankers being delivered in 2021, rates could be “between $5,000 a day better than last year.”
“We think there’s going to be about 20 million more tons of LNG moved this year than last year,” he said, adding that much of the additional production would come from U.S. producers.
Data from the EA Gibson corridor, based on AIS vessel tracking, showed that 14 LNG carriers had already been delivered this year, with another 44 scheduled to take to the water in 2021, which will add to the current LNG fleet of 593 tankers.
Wogan declined to comment further on the deal for subsidiary GasLog Ltd to be acquired by BlackRock, the world’s largest asset manager.
Gaslog Ltd chairman Peter Livanos said last week that the deal would provide “access to growth capital currently absent in the public equity markets.”