Bloomberg the Company & Products

Bloomberg Anywhere Login

Bloomberg

Connecting decision makers to a dynamic network of information, people and ideas, Bloomberg quickly and accurately delivers business and financial information, news and insight around the world.

Company

Financial Products

Enterprise Products

Media

Customer Support

  • Americas

    +1 212 318 2000

  • Europe, Middle East, & Africa

    +44 20 7330 7500

  • Asia Pacific

    +65 6212 1000

Communications

Industry Products

Media Services

Follow Us

LNG Shipping Rates Seen Stalling as Winter Fuel Demand Eases

Feb. 7 (Bloomberg) -- The rally in rates to ship liquefied natural gas may end as winter demand subsides and a shortage of cargoes curbs trading to profit from the price gap between Europe and Asia.

Spot rates were unchanged this week at $127,500 a day, according to shipbroker Fearnley LNG. Earnings to transport one-off cargoes rallied as much as 16 percent since November. One-year charters cost $117,000 a day, lower than at any time last year, figures showed.

While prices for the fuel in Asia are high enough to make trades profitable, there are few cargoes available, according to DNB Markets. A wider difference between traders’ bids and offers has resulted in few bookings, according to Fearnley. Rates could reverse gains as winter ends in the biggest importing countries in Asia, according to Arctic Securities ASA.

“It seems that the sentiment is somewhat softer at present,” Erik Nikolai Stavseth, an Oslo-based analyst at Arctic, said in an e-mailed report today. “Rates could slide as we move out of what seems like an extremely tight winter market from a volume perspective.”

Short-term rates tend to affect share prices for LNG ship owners, especially companies whose vessels are competing for one-off cargoes, DNB analysts led by Nicolay Dyvik in Oslo said in an e-mailed report today. The bank remains positive on the long-term market and the companies because of asset values and income from long-term charters, according to the analysts.

Frozen Fuel

The frozen fuel costs $6 more per million British thermal units in Asia than in Europe, DNB said, citing figures from Argus Media. That’s more than the $3.50 gap needed for trades to be profitable, which could create demand for all available LNG tankers, the bank estimates.

Nuclear outages in South Korea and demand from Argentina and Brazil will probably keep prices high and trades profitable for the rest of the winter and possibly into spring, according to DNB. With few cargoes available, the market depends on existing facilities maintaining exports, the analysts said in the report. New production plants in Algeria and Angola starting after delays would contribute to strong summer demand, they said.

To contact the reporter on this story: Isaac Arnsdorf in London at iarnsdorf@bloomberg.net

To contact the editor responsible for this story: Alaric Nightingale at anightingal1@bloomberg.net

Please upgrade your Browser

Your browser is out-of-date. Please download one of these excellent browsers:

Chrome, Firefox, Safari, Opera or Internet Explorer.