According to UPI Indices, the UP World LNG Shipping Index, tracking global LNG shipping stocks, declined by 0.89% last week as spot charter rates remained lower than anticipated. Despite seasonal expectations for a rise, market fluctuations were tempered by localized geopolitical concerns. Yet, with past patterns hinting at potential growth, the week ahead remains cautiously optimistic.
Gainers and Losers: Mixed Performance Among Companies
Several companies in the index, including Excelerate Energy and Nakilat, showed growth last week, suggesting sector resilience despite an overall dip. Notably, Excelerate Energy led with a 2.1% gain, while Awilco LNG rose 1.1%, nearly breaking past the resistance level it has faced over several weeks. On the other hand, New Fortress Energy and Korea Line Corporation saw the largest declines, falling 7.2% and 4.1%, respectively.
Long-Term Contracts vs. Spot Rates
The LNG shipping sector has increasingly favored long-term contracts over spot charters, which have been less profitable at around $60,000 per day compared to contract rates exceeding $84,000. This trend highlights the industry’s reliance on stable, long-term agreements amid fluctuating short-term rates and uncertain market conditions.
Outlook for Growth in UPI
Despite the recent declines, UPI has followed a pattern of rebounding after similar downturns in the past. Analysts are cautiously optimistic for a potential index upturn, with many of the index’s companies already showing signs of growth that could drive a positive shift in the coming weeks.
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Source: UP-Indices
