The global LNG shipping fleet will make aggregate operating losses of USD 230 million in 2017 as the spot rates remain under pressure, according to shipping consultancy Drewry.
Spot rates (East of Suez) for modern LNG vessels averaged USD 33,000 per day in the nine months to September 2017, representing an increase of 5% compared with the same period last year.
While current spot rates are enough to cover operating costs of around USD 15,000 per day, they are still below breakeven, which ranges between USD 45,000 and USD 60,000 per day.
Shipowners with substantial spot market exposure face continued challenges as Drewry expects pressure on the freight market to continue in 2018 on account of strong fleet growth.
However, rates should strengthen from 2019 as fleet growth slows and trade remains strong, the shipping consultancy informed.
“Having said that, we maintain our long-term bullish outlook for LNG shipping as fleet growth will slow down to 4% in 2019, from an average annual rate of 10% in 2017 and 2018 and trade growth will remain healthy at around 6.5% a year in 2019 and 2020,” Shresth Sharma, Drewry’s lead LNG shipping analyst, said.
Much of this trade demand will be driven by emerging and growing markets, such as Pakistan, Thailand, Bangladesh, the Philippines and Myanmar, which are forecast to have particular potential for imports, according to Drewry.
Although the demand potential of each of these individual markets might not be as great as China or India, their combined demand will be a strong driver of future LNG trade.
“According to our calculation the combined imports of these five countries would be around 32 million tonnes in 2020, creating demand for between 25 and 30 LNG carriers,” Sharma added.