LNG carrier rates in the spot market are at their highest levels since mid-January.
For example, for a LNG Carrier 174,000 m² the rate reached $63,000 per day in June, an increase of 24.2% compared to May. Through 2024, rates remained consistently below $60,000 per day.
The reason for the positive trend, according to Intermodal’s research director, Yannis Parganas, are the heat waves in South and Southeast Asia, which have strengthened the search for specific cargo to meet the growing demand for air conditioning.
However, despite the upward trend compared to previous months in 2024, the average freight for the month of June this year is 21.7% lower than the corresponding month in 2023. One-year time charter (TC) prices for 175,000 km vessels also increased compared to the previous month, although to a lesser extent, averaging US$84,000 per day, an increase of US$4,000 per day compared to the previous month, but a 50% decrease compared to the corresponding average last year.
As for the market outlook, the onset of the monsoon season is expected to reduce demand in South Asia, combined with lower Chinese demand due to high prices and increased hydropower generation. On the other hand, warmer-than-normal summer temperatures in Japan may provide some support to the market.
Buildings
In the new construction sector, market movement in June is zero, following on from May, which also saw only two orders. Despite moderate order activity in the last two months, a total of 58 ships LNG was ordered in 2024, marking the second highest contract activity (January-June), after the record levels seen in 2022, where more than three times as many deals were recorded, totaling 183.
At the same time, new LNG carriers are gradually entering the market. Two additional 174,000 m2 vessels were delivered in June, bringing the total LNG deliveries in 2024 to 26. Next month we expect the delivery of seven vessels and if all scheduled deliveries are made, we will be on track for the highest annual deliveries totaling 73. Accordingly, the fleet is forecast to grow by 9.5% by the end of 2024, based on an order book-to-fleet ratio of 54.4%.
Prices for newly built units of 174,000 m² remained stable at approximately US$264 million. Accordingly, in the second-hand market, prices remained unchanged compared to the previous month and were around US$230 million for vessels aged 5 years, US$160 million for vessels aged 10 years and US$65 million for vessels aged 15 years.
LNG Prices
LNG prices in northwest Europe have fallen below oil contract levels, according to data from S&P Global Commodity Insights. Platts estimated the Northwest Europe LNG index for August at $10.486/MMBtu on July 1. Prices have fallen about 3% in a week and nearly 8% since the start of last month. “Oil is quite expensive at the moment, so we could start to see more LNG exports of Algerian gas piped to Italy and Spain in the coming months,” said David Lewis, LNG analyst at Commodity Insights.
Weaker European LNG prices could boost spot activity as participants with flexible forward quantities may delay cargo deliveries to the winter months and try to take advantage of cheaper spot prices. In June this year, Italy imported 1.67 billion net cubic meters of natural gas from Algeria, down 21% from the year-on-year average and 16% from the previous month, data from Commodity Insights showed.
Similarly, Spain received 727 million cubic meters from Algeria in June this year, down 8% from the previous month but up 60% from the average this year. Finally, as S&P points out, there are currently signs of healthy demand in Asia due to expectations of heatwaves this month.