Monaco-based LNG shipper GasLog plunged to a $26 million loss in the second quarter as shipping rates dropped.
The company noted in its report that the $26 million loss, which compares to a $3.6 million loss in the corresponding loss last year, resulted from the unfavorable movement in mark-to-market valuations of our derivative financial instruments in the second quarter of 2019 and the increase in finance costs.
Speaking of the results, GasLog’s CEO Paul Wogan said, “GasLog’s revenues from our year-on-year fleet expansion and our time charter earnings supported our financial performance against a backdrop of relatively weak LNG shipping rates in the second quarter, further validating our strategy of maximizing our fleet’s multi-year charter coverage.”
He added the company continued to execute on this strategy during the quarter by withdrawing its vessels from the Cool Pool, subsequently chartering the GasLog Shanghai and the GasLog Salem to Gunvor for three and a half years and up to nine months, respectively, securing full utilization for these vessels.
“We are seeing increasing customer interest in multi-month and multi-year charters, underpinning the long-term growth prospects for LNG and supporting our view that the second-quarter weakness in LNG shipping markets is temporary,” Wogan said.
GasLog expects shipping availability to tighten during the second half of 2019 and beyond based on new LNG supply additions, predominantly from the U.S. and almost all of which is secured by long-term off-take contracts, and continued global growth in LNG demand.
We expect multi-month and multi-year chartering activity and shipping rates to increase from current levels during the second half of 2019 and into 2020, with the magnitude and duration dependent on the pace and location of demand growth, the continued ramp-up in new LNG supply additions and cooling and heating demand during the Northern Hemisphere summer and winter, respectively.
In 2021 and beyond, we continue to see a balanced market for LNG shipping relative to supply and demand for the LNG commodity.