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LNG Ship Rates Seen Falling to Two-Year Low on Cargo Shortage

Rates to ship liquefied natural gas could fall to the lowest in two years as a shortage of cargoes hinders opportunities to profit from trades to Asia, where prices are higher, according to Arctic Securities ASA.

Rates will extend losses through the Northern Hemisphere’s summer and may fall below $100,000 a day, Erik Nikolai Stavseth, an Oslo-based analyst, said in an e-mailed report today. That would be the lowest since August 2011, according to assessments from Fearnley LNG, a shipbroker in Oslo. Spot rates fell 1.8 percent last week to $108,000, Fearnley data show.

Prices for the fuel in Asia fell to $17 per million British thermal units from a high of about $19.50, Stavseth said in the report. While the premium over European prices is still high enough to profit from shifting cargoes, there aren’t enough volumes available, he said.

“While the long-term story looks strong still, we see further downside as we move into summer months and would not be surprised to see five-digit quotes in 2013,” Stavseth said in the report. Rates will still be “highly profitable for ship owners,” he added.

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