LNG in World Markets: Freight Rates Continue to Climb as Arb Stays Open

April 2021

The spot shipping market continues to recover from the lows it made over a month ago, with freight rates supported by a climb in LNG prices in the east and a TTF rally in Europe (see chart). Strong northeast Asian demand has kept the trans-Atlantic arbitrage open, further reducing shipping availability with much spot activity centered around eastern loadings for May and June (see market story). </p.

The arb staying open for US Gulf Coast cargoes to Asia has supported day-rates higher throughout the past two weeks. The arb remains open despite a $0.87/ MMBtu additional shipping cost to Asia compared to Europe and this will only continue to tighten shipping availability given round trips to Asia take twice as long as to Europe.

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