UNPRECEDENTED weak demand for liquefied natural gas (LNG), combined with a spike in US exports of natural gas, resulted in bottlenecks in global shipping flows in late October, says S&P Global Platts.
LNG vessels that have not discharged their cargo 30 or more days after loading are regarded as 'effective floating storage.' S&P Global Platts data indicates that natural gas volumes exported from the US meeting this definition climbed to a record 1.54 billion cubic metres aboard 15 vessels as of October 28.
This was equivalent to four times the effective floating storage involving US cargoes compared to the same period in previous years. Overall, the US accounted for some 60 per cent of the stranded volume, with Qatar being the second-largest source. Floating volumes have since fallen dramatically as cargoes were unloaded earlier this month, reported American Shipper.
The huge liquid cargo logjam - which spawned a flotilla of fully laden vessels seeking somewhere to unload - is a bearish sign for LNG demand, S&P Global Platts' managing director of LNG Analytics Josh Zwass told FreightWaves.
For LNG shipping demand, it's more of a mixed bag. On one hand, slow steaming and floating storage are positives for spot rates because they withdraw ships from the market. On the other hand, weak global demand for LNG is a bad omen for future shipping demand.
According to Clarksons Platou Securities, spot rates for tri-fuel diesel-engine LNG carriers were at US$108,000 per day on November 15, marking a month-on-month decline of 17 per cent. Spot rates rose as floating storage grew through October, however, rates have since gone down in line with the decrease in storage volumes.
There have been two major changes since last year's shipping rate peak in November when LNG rates were at $200,000 per day.
'First, the US [export market] was a lot smaller. The US has become such a big component of global LNG,' Mr Zwass noted.
'The second thing is that 2018 was a high price environment [for the LNG commodity]. There were a lot of ships fast steaming. People were trying to find as much capacity as they could and reload cargoes and move them as far across the world as they could.'
This year LNG commodity prices have been very low. 'In this sort of scenario, demand is so bearish that you're wasting time [en route] on purpose,' he said.
WORLD SHIPPING
LNG vessels that have not discharged their cargo 30 or more days after loading are regarded as 'effective floating storage.' S&P Global Platts data indicates that natural gas volumes exported from the US meeting this definition climbed to a record 1.54 billion cubic metres aboard 15 vessels as of October 28.
This was equivalent to four times the effective floating storage involving US cargoes compared to the same period in previous years. Overall, the US accounted for some 60 per cent of the stranded volume, with Qatar being the second-largest source. Floating volumes have since fallen dramatically as cargoes were unloaded earlier this month, reported American Shipper.
The huge liquid cargo logjam - which spawned a flotilla of fully laden vessels seeking somewhere to unload - is a bearish sign for LNG demand, S&P Global Platts' managing director of LNG Analytics Josh Zwass told FreightWaves.
For LNG shipping demand, it's more of a mixed bag. On one hand, slow steaming and floating storage are positives for spot rates because they withdraw ships from the market. On the other hand, weak global demand for LNG is a bad omen for future shipping demand.
According to Clarksons Platou Securities, spot rates for tri-fuel diesel-engine LNG carriers were at US$108,000 per day on November 15, marking a month-on-month decline of 17 per cent. Spot rates rose as floating storage grew through October, however, rates have since gone down in line with the decrease in storage volumes.
There have been two major changes since last year's shipping rate peak in November when LNG rates were at $200,000 per day.
'First, the US [export market] was a lot smaller. The US has become such a big component of global LNG,' Mr Zwass noted.
'The second thing is that 2018 was a high price environment [for the LNG commodity]. There were a lot of ships fast steaming. People were trying to find as much capacity as they could and reload cargoes and move them as far across the world as they could.'
This year LNG commodity prices have been very low. 'In this sort of scenario, demand is so bearish that you're wasting time [en route] on purpose,' he said.
WORLD SHIPPING