WITH Europe bracing itself for yet another season of energy supply challenges, the Liquefied Natural Gas (LNG) shipping market may see a surge in demand during the summer months, which could prove advantageous, reports Hellenic Shipping News Worldwide.
'This year, lng supply will likely exceed demand, so prices will need to decline to levels that will encourage higher consumption,' said Intermodal Shipbrokers of Athens.
'More specifically, according to New York's Refinitiv estimates, this summer, there may be a global surplus of about four billion cbm available for NW Europe, with the US making up the majority of that excess. Currently, the global LNG market is pivoted by Europe's LNG contracting activity ahead of the following winter, as well as competition for cargoes from southeast Asian price-sensitive buyers.'
Said Intermodal research analyst Chara Georgousi: 'Pricing dynamics are critical because they reflect the interaction between fundamentals and macroeconomic and geopolitical risks. The market will need to be carefully balanced, and the rebound in China's demand and the demand of Asia's price-sensitive buyers will be key factors.'
'As the price of LNG has decreased (the Northeast spot Asian price was assessed at $12.5/MMBtu, down 16.6 per cent month-to-month), there is now greater spot demand in Asia, with price-sensitive consumers returning to the market, including Bangladesh, India, smaller Chinese LNG firms, Singapore, Indonesia, and Malaysia, as well as the Philippines and Vietnam that are also expected to enter the spot market this summer.'
'Since the beginning of the year, vessel rates have embarked on a downward trajectory. In the 2022 competitive market, freight rates in the Atlantic averaged close to $160,000/day as vessels competed to move cargoes to Europe,' said Ms Georgousi.
'However, since the beginning of 2023, the freight market has been pivoted by a combination of lower natural gas prices and increased vessel supply, notably in the Atlantic Basin, thus exerting more pressure on rates. Spot rates currently stand above historical average Q1 levels yet notably lower than the highs recorded in 4Q2022. On the other hand, T/C rates are currently seen as robust, reflecting future tightness in the market.'
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'This year, lng supply will likely exceed demand, so prices will need to decline to levels that will encourage higher consumption,' said Intermodal Shipbrokers of Athens.
'More specifically, according to New York's Refinitiv estimates, this summer, there may be a global surplus of about four billion cbm available for NW Europe, with the US making up the majority of that excess. Currently, the global LNG market is pivoted by Europe's LNG contracting activity ahead of the following winter, as well as competition for cargoes from southeast Asian price-sensitive buyers.'
Said Intermodal research analyst Chara Georgousi: 'Pricing dynamics are critical because they reflect the interaction between fundamentals and macroeconomic and geopolitical risks. The market will need to be carefully balanced, and the rebound in China's demand and the demand of Asia's price-sensitive buyers will be key factors.'
'As the price of LNG has decreased (the Northeast spot Asian price was assessed at $12.5/MMBtu, down 16.6 per cent month-to-month), there is now greater spot demand in Asia, with price-sensitive consumers returning to the market, including Bangladesh, India, smaller Chinese LNG firms, Singapore, Indonesia, and Malaysia, as well as the Philippines and Vietnam that are also expected to enter the spot market this summer.'
'Since the beginning of the year, vessel rates have embarked on a downward trajectory. In the 2022 competitive market, freight rates in the Atlantic averaged close to $160,000/day as vessels competed to move cargoes to Europe,' said Ms Georgousi.
'However, since the beginning of 2023, the freight market has been pivoted by a combination of lower natural gas prices and increased vessel supply, notably in the Atlantic Basin, thus exerting more pressure on rates. Spot rates currently stand above historical average Q1 levels yet notably lower than the highs recorded in 4Q2022. On the other hand, T/C rates are currently seen as robust, reflecting future tightness in the market.'
SeaNews Turkey