Global Markets: LNG Shipping on Track to Stay Strong in 2019

The liquefied natural gas (LNG) freight market has enjoyed strong growth over the past 12 months, a London-based market observer with Braemar ACM Shipbroking told Rigzone.

“The LNG shipping market has become significantly tighter compared to the last few years and spot rates have hit multi-year highs in Q4 2018,” said Evangelos Dimopoulos, LNG research analyst with Braemar. “Supported by healthy LNG demand and supply fundamentals and limited vessel availability in the spot market, we expect the LNG freight market to remain strong and that trend to continue into 2020.”

Compared to the previous year, LNG trade in 2018 likely will have grown 10 percent to reach 320 million tonnes by year’s end, added Dimopoulous. He explained that the robust grown in LNG trade for 2018 stems from ongoing infrastructure expansion. A total of 32 million tonnes have come online this year, primarily in the United States, Australia and Russia, he said.

Dimopoulos also noted that LNG trade growth should remain strong. He said that an eight-percent increase – to 345 million tonnes – is anticipated for 2019.

“Approximately 33 million tonnes of liquefaction capacity is expected to come online in 2019,” continued Dimopoulos. “With the destination clause removed from the LNG contracts, meaning that cargoes can be re-routed and re-exported, we expect LNG trade to become more spot-based and the LNG market more liquid in the coming years.”

The growth in the LNG sector has not been limited to trade and liquefaction capacity. Dimopoulos pointed out that the LNG carrier fleet “continued to expand rapidly” during the past year. He said that 547 vessels boasting a combined 85 million cubic meters of carrying capacity should be on the water by year’s end, translating into a nine-percent growth rate for that metric. Moreover, he said that contracting has picked up in 2018. Fifty-seven newbuild orders have been placed, attracting new market entrants, he noted.

Dimopoulos added that another solid year on the newbuild front appears to be on the horizon.

“Forty-nine vessels are expected to enter the market in 2019, with a combined carrying capacity of 7.8 million cubic meters,” Dimopoulos said. “Fleet growth is expected to be slightly slower than global liquefaction capacity growth next year. In recent years, fleet growth has remained dominated by the largest vessels of 165,000-plus cubic meters.” source: Rigzone | by  Matthew V. Veazey|Rigzone Staff