Biggest Shipping Hedge Fund Sees Frozen Gas Beating Crude in 2012: Freight
Tankers hauling liquefied natural gas at sea will earn record rates in 2012 as demand reaches an all- time high, beating returns from vessels carrying oil and coal, according to the world’s biggest shipping hedge fund.
The tankers, each holding enough gas to meet about 25 percent of peak daily winter demand in the U.K., will earn as much as $200,000 a day this year, from $140,000 at the end of 2011, said Andreas Vergottis, the Hong Kong-based research director at Tufton Oceanic (OCEHEDU) Ltd. That means the most profit ever for Golar LNG Ltd. and Teekay LNG Partners LP, which operate 33 of the vessels, analyst estimates compiled by Bloomberg show.HT: Abnormal Returns
Demand for LNG, liquefied by cooling the gas to minus 260 degrees Fahrenheit, is rising as nations from the U.K. to South Korea increase pollution curbs. Gas emits about half the carbon dioxide of coal. Japan, the biggest importer, is buying more after closing 89 percent of its nuclear capacity following March’s Fukushima disaster, eliminating a glut of tankers. Ship shortages may worsen, with the 372-strong fleet projected to expand just 0.8 percent this year, Morgan Stanley estimates.
“LNG is a high-growth, high-profit industry,” said Vergottis, whose research is used by the $1.45 billion Oceanic Hedge Fund, which gained 6.8 percent in the first 11 months of the year as the Lloyd’s List/Bloomberg Index of the 50 largest shipping companies (LLSIVAL) slumped 39 percent. “Next year looks even more hot. There’s not a single cloud for two years.”
The cost of hiring an LNG tanker for a year or more averaged $97,630 a day in 2011, from $43,663 in 2010, according to Fearnley LNG, an Oslo-based consultant and brokerage that’s a unit of the Astrup Fearnley Group.
That compares with last year’s 90 percent decline in rates for the largest oil tankers to $1,214 a day as the biggest fleet in about three decades overwhelmed demand, data from the London- based Baltic Exchange show. Capesizes hauling coal and iron ore averaged $15,639 a day last year, from $33,298 in 2010, according to the bourse, which publishes freight costs for more than 50 maritime routes....MORE