LNG tanker rates at 14-month high as traders snap up ships for Asia

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Freight rates to ship liquefied natural gas (LNG) have risen to their highest in more than a year as traders snap up vessels to meet Asia’s increased appetite for gas during the peak winter season, shipping and trade sources said on Thursday.

Top LNG buyers led by China have re-entered to the spot market as domestic demand returns to pre-pandemic levels, causing a surge in spot prices, which in turn is making it lucrative to ship cargoes from west to east, they said.

The daily charter rate for shipping LNG in the Pacific basin rose to $114,750 a day on Tuesday while the daily rate to ship LNG in the Atlantic basin rose to $131,250 a day, said Tim Mendelssohn, managing director at Spark Commodities, adding that the rates are the highest since October 2019.

“LNG freight spot market continues to strengthen as cargo arbitrage widens, tonne miles increase and the number of subsequent available vessels decreases,” he said.

Asian spot LNG prices <LNG-AS> rose to a near two-year high this week as supply of the super-chilled fuel has been disrupted in some areas.

A record 2.85 million tonnes of U.S. Gulf coast cargoes is slated to arrive in the Far East by end of the month, up 65% from November, said Rebecca Chia, analyst at data intelligence firm Kpler.

Total LNG volumes into the Far East are expected to hit 15.5 million tonnes in December, with 50% of these cargoes currently on water, laden on vessels that are still in transit to their final destination, which in turn is driving rates up, she said.

“A huge chunk of ex-U.S. Gulf Coast vessels is crossing the Pacific Ocean on the map right now due to arrive in the Japan-Korea-Taiwan-China region, many of which were caught in the Panama Canal congestion just two weeks back,” she said, adding that congestion at the canal hit an unprecedented count of 28 vessels for the week starting Nov. 23. 

Main Photo: The LPG Tanker vessel ‘Al Nuaman’ with Qatari LNG enters the LNG Terminal Port in Swinoujscie, Poland. EPA/TOMEK MURANSKI

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