- The LNG market remains bearish, with weak fundamentals and size constraints dominating.
- LNG rates on key routes, such as BLNG1 Aus-Japan and BLNG2 Houston-Cont, saw mixed changes, while the period market stayed relatively stable.
- The LPG market showed significant gains, with bullish sentiment driven by strong demand in both basins.
- Rates on LPG routes, including BLPG1 Ras Tanura-Chiba and BLPG3 Houston-Chiba, experienced sharp increases.
LNG Market: Bearish Sentiment Persists
According to data from the Baltic Exchange, the LNG market continues to face bearish sentiment as weak fundamentals dominate. In the Pacific, market pressure remains high due to size constraints on cargoes, further narrowing the rate differential between vessel sizes. The gap between 174,000 cbm and 160,000 cbm vessels is now approximately $7,000.
On the Baltic BLNG1 Aus-Japan route, rates for 174,000 cbm two-stroke vessels dropped by $4,800 to $21,200, while 160,000 cbm TFDE vessels declined $1,800 to $14,200.
In the US, cargo fixing showed some activity, but the overall sentiment remained subdued. The BLNG2 Houston-Cont route for 174,000 cbm vessels saw a modest gain of $1,300, closing at $22,400. The 160,000 cbm TFDE index rose $800 to $14,600. On the BLNG3 Houston-Japan route, 174,000 cbm ships recorded a slight increase of $200 to $28,400, while 160,000 cbm vessels dipped by $400 to $17,400.
Period Market Developments
The period market saw limited but noteworthy activity, including a short-term fixture and an index-linked structure deal. Baltic period rates remained relatively stable. The six-month rate increased by $50 to $27,400, while the one-year term rate edged down to $36,750. The three-year period rate saw a sharper decline, settling at $53,850. Overall, the LNG market outlook remains bearish, with no immediate recovery in sight.
LPG Market: A Bullish Turn
The LPG market experienced a marked recovery this week, with strong gains across both basins and all three major routes.
In the East, demand ahead of the Christmas season remained robust, with cargoes awaiting fixation. Although the vessel list appears adequate to meet demand, bullish sentiment is driving rates upward. The BLPG1 Ras Tanura-Chiba route saw an $8.75 increase, closing at $58.917 and translating to a TCE equivalent of $41,868.
Atlantic Basin Gains
The Atlantic basin also recorded heightened activity, particularly on US routes. The BLPG2 Houston-Flushing route, typically less active than BLPG3, saw increased inquiries, pushing rates up by $7.25 to $63, yielding a TCE equivalent of $64,030.
On the BLPG3 Houston-Chiba route, rates surged by $12.833, reaching $113.833, supported by tighter tonnage lists and outstanding cargoes. This translated to a TCE equivalent of $48,727, marking a particularly strong week for the LPG market.
Positive Outlook for LPG
With demand holding steady and limited vessel availability, the LPG market is positioned for continued momentum as the year-end approaches. Brokers and market participants remain optimistic about sustained bullish trends in the coming weeks.
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Source: Baltic Exchange
