LNG Shipping Rates Nosedive

Maritime Activity Reports, Inc.

February 22, 2015

 With LNG prices down as slowing demand combines with rising output, the cost to ship super-chilled natural gas has also tumbled to the lowest level in more than four years and is forecast to fall further, reports Bloomberg

 According to Andrew Buckland, a London-based analyst at Wood Mackenzie Ltd rates to transport liquefied natural gas have declined to about $50,000 per day and will probably go lower before recovering. In 2012 it was more than $140,000 a day.
That’s good news for buyers and sellers of the fuel. Lower rates can benefit traders that sign short-term contracts and give LNG players flexibility in where they deliver the gas, said Hal Miller, president of consulting company Galway Group in Houston. At the same time, ship owners will be hurt by falling rates.
There has been reports that over a dozen liquefied natural gas (LNG) tankers are parked, many idle, in and around Singapore - one of the world's biggest trading hubs for the fuel - in a sign that the slowdown engulfing world gas markets may be worsening into a crisis.
LNG ships ordered three or four years ago have struggled to find work and compete with newer, larger and more fuel-efficient vessels that have pushed rates to the lowest since late 2010, market analysts said.
The market could stay depressed until the middle of next year with rates potentially sinking to $40,000 a day with too many vessels, said Tatsuo Osakabe, the Tokyo-based managing director of Fearnleys Japan, a shipping broker.
The crash in demand in Asia is so severe that some analysts say the future of the entire LNG industry may be impacted. "The weakness in energy markets is threatening to derail LNG's emergence as the pre-eminent energy source," ANZ bank said this week in a research note.
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