Tradewinds: Poten Sees Likely Upswing for LNG Shipping From End of 2018

06 June 2016: “LNG shipowners will have to wait another 18 months before the market for their vessels starts to show significant improvement, according to shipbroker and consultant Poten & Partners. “’We expect the current surplus of vessels to be absorbed by the end of 2018,’ shipbroker Steen Kyvsgaard told delegates attending the Madrid LNG & Shipping Forum in Spain. “Kyvsgaard says this largely will be due to all the volumes of LNG — approximately 120 million tonnes per annum (mtpa) — that are due to come onto the market in the next two to three years. “Poten’s team calculates that 2016 will see a halving of the number of ships available in the market. Next year will stay “fairly flat” before the emergence of five new liquefaction projects — Cameron LNG, Corpus Christi LNG and Freeport LNG in the US, Yamal LNG in Russia and Ichthys LNG in Australia— produce a need for extra shipping. “’We don’t forsee any lack of ships before the end of 2018 but, at the same time, we believe that the reality of a tight or balanced market will mean we are moving into an era of structural deficit of ships,’ Kyvsgaard said. “He details that Poten’s analysis shows there are approximately 43 ships available on the spot market to undertake charters of at least three months. Of these, three-quarters are controlled by independent owners, with The Cool Pool being a major player in that group. “Kyvsgaard says independent owners have become the most active shipowners in the market, undertaking 72% of all fixtures in 2015 and overtaking the previously dominant project and portfolio players. He adds that this largely is due to delivery of speculatively ordered LNG tonnage beginning in 2013. “The Poten broker says traders cashing in on low commodity and shipping prices, alongside the emergence of new demand centres, have become the most active charterers, accounting for around 37% of all fixtures on the market last year. He says traders have been staying in the spot market and not moving onto longer fixtures. “Kyvsgaard says 93% of all charters done are now concluded on a spot basis, with the average voyage time falling to below 20 days in 2016. “He adds that the LNG shipping sector is moving more towards intra-basin trades as the arbitrage that had existed between the Atlantic and Pacific has disappeared. In addition, there was no real solid demand for LNG, a high number of available vessels and rates have stabilised at historic lows. “’The tendency we see is that charters are becoming increasingly shorter, the spot market so attractive and charterers’ concerns and uncertainties over where cargoes will load and discharge,’ Kyvsgaard said. ‘We see people are staying on the spot market.’ “’We think mid-term charters will return once ships start being picked off. Right now, the spot market is a very tempting place to operate because you have available ships and because the economics are very attractive.'”