LNG freight rates surge, spot prices remain high

Charter rates for the global liquefied natural gas carrier fleet surged this month, while spot LNG prices remain above $30/MMBtu.

According to Spark Commodities, LNG freight rates for a 160,000-cbm TFDE carrier reached $202,500 a day in the Pacific on Tuesday, the highest since January 15 this year.

To remind, rates surged to a record high of $322,500 per day in January due to a cold snap in Asia and Europe.

Atlantic rates rose more than two times since the beginning of this month while Pacific rates also increased substantially. However, Pacific rates dropped slightly to reach $138,250 a day on Tuesday, Spark said.

Further gains in Pacific spot LNG freight rates resulted in a “record high Pacific over Atlantic premium, driven by a lack of Pacific vessels, strong cargo demand globally and lack of new tonnage heading to Asia given strong European cargo prices,” Spark said.

Spot LNG prices jump

The rise in charter rates comes at a time when Asian spot LNG prices reached record highs.

The JKM spot LNG price surged to $56.326/MMBtu earlier this month due to the gas price crisis in Europe and winter restocking demand among Asian end-users, according to S&P Global Platts. It hit the highest level for the LNG benchmark for Asian spot LNG since Platts launched it in early 2009.

The price declined in the meantime but it continues to trade above $30/MMBtu. The JKM for December reached $34.890/MMBtu on Tuesday.

Poten & Partners said in a recent note that Asian spot prices “remain poised for strength through winter, although many end-user buyers have lined up cargoes for the cold season and do not appear to be in desperate positions.”

For market participants, key issues going forward are winter weather and failure-to-deliver risks.

“Unexpected cold spells and cargo defaults could cause more price spikes if utilities are forced to pay up in spot markets for prompt shipments,” Poten said.

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