From FreightWaves:
Seasonality plays a pivotal role in shipping markets. Two prime
examples are liquefied natural gas (LNG) shipping and container
shipping. At this time of year, LNG shipping rates usually increase as
importers book more cargoes in preparation for winter fuel demand, and
box rates rise as U.S. retailers bring in their inventories.
LNG rates are now seasonally strengthening, following their normal
pattern. But container rates in the trans-Pacific remain stubbornly weak
and are actually falling further.
LNG shipping rates strengthen
“Many expected 2019 to be the year of the LNG carrier,” said Stifel
analyst Ben Nolan. “Those high hopes failed to materialize” and rates
have been “disappointing,” but finally, “that has begun to change,” he
said, pointing out that rates are now double April levels.
According to Clarksons Platou Securities, rates for
tri-fuel-diesel-engine LNG carriers are now $70,500 per day, up 6.8%
week-on-week and 8.5% month-on-month.
Nolan explained, “Some of that can be attributed to the surge of new export capacity
in the past several months (Corpus Christi train 2, Cameron train 1,
and Freeport train 1), which have collectively added about 4% to global
LNG production in the course of about three months.
“There has also been a surge of vessel contracting by traders, which
is likely in advance of a storage trade. While Asian LNG prices are at
unbelievably low levels of about $4.50/mmbtu [million British thermal
units] and the forward curve tops out for this season at $6.90 in
January (nearly half of last year’s peak), the $2.40 spread should be
sufficiently high enough to make an arbitrage profit over the course of
the next several months.”
According to Evercore ISI analyst Jon Chappell, “Available tonnage
has contracted to limited levels in most export regions. We foresee
recent positive momentum in rates gaining a head of steam over the
coming months.”
Last year, LNG spot shipping rates hit an unusually high level of
$200,000 per day in November, and then collapsed in subsequent months as
Asian LNG commodity prices fell.
Nolan believes this year’s peak pricing will fall short of 2018’s for
three reasons. “First, [the tariff issue] and not giving in to Trump
may keep the Chinese from aggressively buying [U.S. LNG] for inventory.
Second, there has been investment in land-based storage infrastructure,
so the need for floating storage is not as great.
“And third, and perhaps most importantly, the massive Power of
Siberia pipeline from Russia is scheduled to start flowing gas to China
on December 1. At full utilization, this equates to 24 mtpa [million
tons per annum] of LNG capacity, which compares to 59 mtpa of Chinese
LNG imports over the past 12 months.”...MUCH MORE
We titled our last piece on the Power of Siberia pipeline: "
Big, Big Money: The 'Power of Siberia’ gas pipeline to China could be global game changer"
