Drewry: LNG Short-Term Freight Index Declined 4 Pct in February

Drewry Maritime Research’s latest LNG Shipping Insight report saw the LNG Short-Term Freight Index decline by 4% in February. This was largely because heating demand subsided in major importing regions. Cargo availability also tightened because of a few unplanned shutdowns.

LNG shipping enjoyed a dream run during 2011-12 owing largely to increasing tonne-mile demand and an almost stagnant fleet. Freight market prospects would be even brighter if fleet supply remains at current levels. However, this will not be possible as 81 more vessels could join the fleet during 2013- 15, while only 10 vessels could be considered as demolition candidates during the same time period. The fleet could grow to 430 vessels (accounting for projected demolitions) by the end of 2015, representing a rise of 20% from current levels.

The orderbook-to-fleet ratio was 30% at the end of February, while it was just over 8% at the end of 2010. In 26 months, fresh orders for 89 vessels aggregating 14.5 million cbm were placed.

Based on liquefaction capacity addition plans in Australia and the US, the LNG shipping industry could need many more vessels in the latter half of the decade than are currently on order. A few positive developments in Africa also indicate that LNG production could rise significantly if everything goes as projected.

However, the major concern for the shipowners is that not much liquefaction capacity will be added during 2013-15 when most of the new vessels are delivered. Reports of possible re-start of Japanese nuclear facilities could also return the market to the times when vessels waited for months waiting for employment or for commissioning of the project with which they were tied up.

Japan was the single largest factor driving the market in 2012, and the trend is expected to continue in 2013, as re-starting all of the nuclear facilities cannot be a hurried process. Still, the medium-term outlook for unchartered vessels does not appear bright as approximately 40 million tonnes per annum of additional production would be required to keep these vessels employed. Unfortunately, this is not on the cards and therefore, it appears the short-term and spot freight markets could start falling soon.

The Drewry LNG Freight Index is freight rate assessments based on actual deals and market reports for a conventional LNG carrier of 160,000-173,000 cbm and less than five years of age. Hire period for long-term freight rate assessments are for charter durations of 15 years or more, while short-term freight rate assessments are based on charter duration of one to three years. Base year for the Index is January 2005.

LNG World News Staff, March 26, 2013

Share this article

Follow LNG World News

Events>

<< Jan 2017 >>
MTWTFSS
26 27 28 29 30 31 1
2 3 4 5 6 7 8
9 10 11 12 13 14 15
16 17 18 19 20 21 22
23 24 25 26 27 28 29
30 31 1 2 3 4 5

CWC Iran LNG & Gas Partnerships Summit

It is the must attend event to form partnerships and explore opportunities along the dynamic gas value chain…

read more >

Fundamentals of LNG

Operational and commercial essentials of the Liquefied Natural Gas (LNG) sector – training course by tutored distance learning…

read more >

LNG Pricing, Trading & Risk Management / 2-Day Course

The global LNG market is rapidly growing in size and complexity…

read more >

Floating LNG

Despite challenging market conditions, global capital expenditure (Capex) on FLNG facilities is forecast to increase significantly over the 2016-2022 period. The protracted oil price downturn has impacted the sanctioning of capital intensive liquefaction units over the last 24 months. However, the need to move towards cleaner sources of energy and diversify gas supply has stimulated the floating regasification market – over 14 countries are expected to commission their first floating import unit over the forecast period. Against this backdrop, SMi’s 5th annual Floating LNG conference will provide attendees with strategic insight on the latest developments within the FLNG market to optimise activities and ensure project sustainability and success. The two-day programme will also equip you with the tools to overcome the logistical, financial, technological and economic challenges associated with FLNG deployment and ensure succinct transition from design to operation.

More info

read more >