global-hydrogen-hub global-hydrogen-hub global-hydrogen-hub
Global LNG Hub Logo
No Result
View All Result
  • Login
  • Premium Content
  • Blog
  • Events
  • Industry Links
    • LNG Industry Association
    • LNG Market Advisors
    • Government Body
    • LNG Market Information
    • LNG Legal Advisors
    • LNG Research Institute
    • LNG Training & Education
  • Other Hubs
    • GLOBAL MARITIME HUB
    • EUROPEAN GAS HUB
    • THE COAL HUB
    • GLOBAL HYDROGEN HUB
    • CRITICAL MINERALS HUB
  • FREE TRIAL
  • My account
  • Login
Cart / €0.00

No products in the cart.

  • Premium Content
  • Blog
  • Events
  • Industry Links
    • LNG Industry Association
    • LNG Market Advisors
    • Government Body
    • LNG Market Information
    • LNG Legal Advisors
    • LNG Research Institute
    • LNG Training & Education
  • Other Hubs
    • GLOBAL MARITIME HUB
    • EUROPEAN GAS HUB
    • THE COAL HUB
    • GLOBAL HYDROGEN HUB
    • CRITICAL MINERALS HUB
  • FREE TRIAL
  • My account
  • Login
Global LNG Hub
No Result
View All Result
Home LNG Trade

What is driving LNG spot charter rates?

Editor by Editor
7 years ago
Reading Time: 2 mins read
Share on FacebookShare on TwitterShare on Linkedin

No Fukushima like disasters, demolitions have only been a handful and deliveries have remained strong, yet, LNG spot charter rates have touched the highest mark since the summer of 2012. In this piece, we investigate what is driving the rally of the LNG spot charter market this summer.

RELATED POSTS

Chinas-gas-consumption

China’s role in the global LNG market may become less dominant

3 weeks ago
US-LNG

The embargo isn’t stopping the U.S. LNG train

1 month ago
global-LNG

How the global LNG market balanced in Q1 2025

1 month ago

Despite growing availability of LNG carriers and traditionally low seasonal demand, LNG charter rates have remained firm throughout the summer of 2018. Spot charter rates strengthened throughout the second quarter of 2018 and are at their peak since 2012.

Shipowners with modern DFDE vessels chartered out their vessels at $60,000pd in 2Q18, which is about 50% higher than the rates seen in the third quarter of 2017. At the end of June 2018, some vessels were reportedly fixed at $85,000pd – the level usually seen in the peak of winter, when LNG vessels are in high demand.

DFDE vessels spot rates ($ pd)

One of the major factors behind the recent rise in charter rates is the declining employability of older LNG carriers because of poor fuel efficiency, higher operating costs, less cargo-carrying capacity and high boil-off rates. Combined, these factors have effectively rendered a number of LNG carriers unemployable, hence squeezing the actual supply of vessels in the spot market.

With regard to fuel efficiency, bunker costs play a major role in decision-making. An old (30 year plus) steam turbine vessel can use as much as 215 tonnes of bunker fuel per day, while the average consumption of more modern steam turbine vessels is around 170 tonnes per day. On the other hand, modern DFDE LNG vessels burn only 140 tonnes of bunker, reducing the cost of bunker substantially. For instance, at current IFO bunker prices, a steam turbine vessel will burn $13,000pd of additional bunkers, compared with a modern DFDE ship.

Another issue, which makes modern DFDE vessels more attractive to charterers, is their ability to reinject the boil-off back into cargo tanks. This is a critical factor, especially on long-haul trades, where a substantial chunk of the cargo is either used as fuel, or simply flared on older ships.

Additionally, there are other issues relating to the maintenance, off-hire days, operational flexibility and modern navigation and signalling systems, which are superior on modern vessels. Older vessels also run the risk of frequent breakdowns, which charterers are not willing to take when they have options available.

Even at a time when charter rates are quite strong, there are at least 24 laid-up steam turbine vessels, which is about 11% of the total steam turbine fleet. About 92% of these vessels are younger than the average demolition age of LNG carriers over the last five years.

The current state of LNG vessel employability is challenging the conventional wisdom about the average economic life of LNG carriers, which used to be 35-40 years. If the current trends continue, ship financiers will start taking a more conservative view while financing second-hand assets in the LNG market.

To corroborate the popularity of modern ships, the chart below presents the spot market chartering trends in 2018 for LNG carriers. Year-to-date, 190 spot fixtures were reported; out of those only 59 were for steam turbine vessels – about 30%.

Monthly spot fixtures and vessels employed

Source: Drewry Maritime Research


RELATED POSTS

Chinas-gas-consumption

China’s role in the global LNG market may become less dominant

3 weeks ago
US-LNG

The embargo isn’t stopping the U.S. LNG train

1 month ago
global-LNG

How the global LNG market balanced in Q1 2025

1 month ago
Tags: DFDE vessels spot ratesLNG carriersLNG spot charter ratesShefali Shokeen
Editor

Editor

Related Posts

Chinas-gas-consumption
LNG Contracts & Pricing

China’s role in the global LNG market may become less dominant

3 weeks ago
US-LNG
LNG Demand

The embargo isn’t stopping the U.S. LNG train

1 month ago
global-LNG
LNG Demand

How the global LNG market balanced in Q1 2025

1 month ago
LNG-imports
LNG Supply

Growing conflict over Qatar LNG shipments to Europe?

2 months ago
Natural-gas-prices
LNG Contracts & Pricing

Natural gas prices surged across all key markets in February with geopolitical tensions fuelling volatility

2 months ago
European-LNG-imports
LNG Contracts & Pricing

European LNG imports could surge by more than one-third this summer

3 months ago

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

No Result
View All Result

Trending Posts

LNG-prices

Review of natural gas and LNG prices

April 23, 2025
LNG-prices

Review of natural gas and LNG prices

May 7, 2025
LNG-exports

Russia aiming to increase LNG exports by 100bcm by 2030

April 22, 2025

Recent Post

LNG-prices

Review of natural gas and LNG prices

May 7, 2025
benchmark-gas-prices

Natural gas prices down significantly across all key markets in April

May 1, 2025
LNG prices

Review of natural gas and LNG prices

April 30, 2025
LNG-prices

Review of natural gas and LNG prices

April 23, 2025
Chinas-gas-consumption

China’s role in the global LNG market may become less dominant

April 23, 2025
LNG-exports

Russia aiming to increase LNG exports by 100bcm by 2030

April 22, 2025
LNG-HUB-Logo

Online platform for sharing analysis and information on Global and regional LNG markets. Weekly newsletter each Wednesday more info

Categories

  • Asian LNG
  • Australian LNG
  • European LNG
  • Global LNG
  • LNG Africa
  • LNG Bunkering
  • LNG Latin America
  • LNG North America
  • LNG Projects
  • LNG Trade and Pricing
  • Middle East LNG
  • Small Scale LNG
  • FLNG

Recent Posts

Review of natural gas and LNG prices

Natural gas prices down significantly across all key markets in April

Review of natural gas and LNG prices

Energise your Wednesday!

Sign up to receive our weekly newsletter with new LNG market reports, presentations & analysis. Every Wednesday!

Your subscription could not be saved. Please try again.
Your subscription has been successful.

By signing up, I agree to our TOS and Privacy Policy.

© 2020 GlobalLngHub | All Rights Reserved

Welcome Back!

Login to your account below

Forgotten Password?

Retrieve your password

Please enter your username or email address to reset your password.

Log In
No Result
View All Result
  • Premium Content
  • Blog
  • Events
  • Industry Links
    • LNG Industry Association
    • LNG Market Advisors
    • Government Body
    • LNG Market Information
    • LNG Legal Advisors
    • LNG Research Institute
    • LNG Training & Education
  • Other Hubs
    • GLOBAL MARITIME HUB
    • EUROPEAN GAS HUB
    • THE COAL HUB
    • GLOBAL HYDROGEN HUB
    • CRITICAL MINERALS HUB
  • FREE TRIAL
  • My account
  • Login

© 2020 GlobalLngHub | All Rights Reserved

This website uses cookies. By continuing to use this website you are giving consent to cookies being used. Visit our Privacy and Cookie Policy.