Market in Focus: Gas Ships

Liquefied natural gas (LNG) shipping hasn’t been able to avoid the negative impact of COVID-19 as gas demand fell during the first quarter of 2020.

The residential sector recorded the largest drop in consumption this year compared to 2019 which wasn’t helped by the mild winter seen in the US. The shut-downs of major economies and more specifically shut-ins of cargoes due to the historically low gas prices means we have basically witnessed demand destruction.

LNG rates have fallen since the beginning of the year with the one-year time charter dropping by 80%. Figures back in January were circulating around the 80,000 USD/day mark whereas today we are only seeing earnings of $16,000/day.

Larger liquefied petroleum gas (LPG) vessels have also suffered since the beginning of the year with a fall in values. Rates for large LPG carriers fell by 35%. Crude prices fell throughout March, making LPG less competitive for petrochemical producers and reducing overall demand for LPG. However, we are seeing a higher demand for propane from Chinese plants, where things are beginning to get back to normal and restrictions after COVID-19 lockdown are gradually being lifted.