The glut of LNG carriers is expected to persist until 2018, when more LNG cargoes emerge in Australia and the United States.
As of June, IHS Maritime’s Sea-web.com data show there are 144 LNG carriers and seven floating storage and regasification unit vessels on order that are greater than 60,000 m³.
IHS Energy senior director Terrell Benke noted that 108 of the vessels in the orderbook are associated with charters that extend beyond a year. In contrast, 43 vessels are covered by either a short-term charter or open for charter.
Average monthly charter rates fell to approximately USD23,000/day in May 2015 as demand for Atlantic volumes in the Pacific Basin weakened. Spot charter rates recovered to only approximately USD27,000/day by the end of June with increased spot demand from Latin America and the Middle East, which pushed LNG portfolio players and traders such as Trafigura to actively seek short-term shipping capacity to fulfil their short positions.
Benke commented, “Despite this recent, albeit small, uptick in spot charter rates, the capacity surplus is likely to continue until Australian and US volumes ramp up over the next three years. However, a tightening could still reoccur by the turn of the decade. Based on IHS Energy’s LNG supply outlook, more vessels will need to be ordered between 2015 and 2017 if charterers in the shipping market want to avoid another cycle of tight market conditions for chartering vessels.”
LNG carriers have been ordered for the under-construction Australian supply, though the buyers of US exports, expected online by 2020, have yet to fully order the necessary shipping capacity. The ordering of LNG carriers for US projects has drastically slowed down from the second half of 2014. By June 2015, only nine vessels were ordered with respective ties to US offtake contracts ¬- notably Mitsui, Mitsubishi, and BG.