The UP World LNG Shipping Index (UPI) fell by 3.54% last week, outpacing the S&P 500’s 0.96% decline. A recovery in Asian LNG demand was overshadowed by a significant drop in spot charter rates, hitting below break-even levels. This situation is particularly harsh for operators without long-term contracts, pushing some towards potential asset sales. Almost all companies in the index faced declines, with notable drops for Awilco LNG, Exmar, and Tsakos Energy Navigation. Meanwhile, the only company that saw gains was Dynagas LNG Partners, which benefited from its long-term contracts, reports LNG Shipping Stocks.
UPI & SPX
Last week, UPI, which tracks listed LNG shipping companies, lost 6.01 points, or 3.54%, closing at 163.60 points. The S&P 500 index lost 0.96%. The chart below shows both indices with weekly data.
Broader view
Last week, there was a recovery in Asian LNG demand accompanied by a further decline in spot charter rates. According to Spark Commodities, these rates are approximately $20,000 per day for the Atlantic and around $36,000 per day for the Pacific, below break-even levels. This situation is particularly challenging for operators of older ships that lack long-term contracts, as they may be forced to sell. Furthermore, stocks of companies with at least some vessels without long-term contracts have responded negatively. This strategy, which previously generated profits during the winter season and was favoured by investors, has now become a burden, leading to penalties for these companies from investors.
Constituents
The UPI experienced a strong decline supported by a virtual absence of rising titles. Several companies broke their support with their decline, while others came significantly closer to them. Traded share volume remains low.
Exmar (BSE: EXM), which ended its quarter-long rise with this fall, lost the most—nearly 15 per cent. Given the company’s delisting intentions and low volume, this decline will likely be motivated by events other than the market.
Even so, the Black Peter was pulled out by Awilco LNG (OSE: ALNG), which lost 13.6%. The company’s fleet consists of two TFDE tankers, one of which, WilForce, is traded on the spot market.
Tsakos Energy Navigation (NYSE: TSE) lost 8.5% to support, and attempts for a deeper decline were repelled. Cool Company (NYSE/OSE: CLCO) is down 7.2%. New Fortress Energy (NASDAQ: NFE) lost 5.7%. That’s a lot, but significantly less than during the previous declines we’ve written about.
Other losses were more minor, after all. Flex LNG (NYSE/OSE: FLNG) lost 3.8%, falling below its long-term support at $25. It, too, has one of the thirteen ships on the spot market. Japan’s NYK Line (TSE: 9101) experienced the same decline.
A three per cent drop put Korea Line Corporation (KRX: 005880) shares at the support level.
Capital Clean Energy Carriers (NASDAQ: CCEC)’s 2.8% drop followed the previous rise and has more of a corrective reason caused by the sector’s decline.
MISC Bhd (KLSE: 3816) may have lost “only” 2.6%, but it continues its return to 2023 levels.
The remaining Japanese companies, Mitsui O.S.K. Lines (TSE: 9104) and “K” Line (TSE: 9107), lost two and a half per cent each. Both are still heading sideways and have yet to choose their future direction.
FSRU and FLNG specialists Excelerate Energy (NASDAQ: EE) and Golar LNG (NASDAQ: GLNG) lost 0.6% on either end.
Oil and gas producers ranged from -0.3% for Shell (NYSE: SHEL) to no movement for Chevron (NYSE: CVX) to a 0.6% gain for BP (NYSE: BP).
The only company that rose is Dynagas LNG Partners (NYSE: DLNG), which, while a portion of its fleet is powered by steam, has been covered by a long-term contract for several years. Its growth was 1.6%.
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Source: LNG Shipping Stocks
