LNG Rates Decline While LPG Surges on US Activity

By
Mfame Editor
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87

  • BLPG2 Houston-Chiba Posts Significant Rate Increases.
  • Middle East LPG Market Remains Flat Amid US Bull Run.
  • Tighter Tonnage Drives Optimism in LPG Rates.

Declining rates across LNG due to weak demand and oversupply was in stark contrast to the LPG market which enjoyed a bullish trend on account of strong US activity and tighter tonnage. Several LNG routes struggled despite slight gains in the Atlantic; however, LPG rates surged sharply on key US routes, showing optimism for further gains, reports Baltic Exchange.

LNG Market Overview

The spot market for LNG continues to decline, with low demand being the primary factor in both Pacific and Atlantic markets. Charter rates are at very depressed levels but charterers remain cautious about lifting tonnage.

While the softness in rates is also partially attributed to the fact that some market players are in Dubai for the Bahri Week events, the underlying cause is still the unprecedented combination of long tonnage lists and weak cargo demand.

BLNG Index Movements

  1. Pacific Market (BLNG1 Aus-Japan):174cbm 2-Stroke Index: Fell by $4,600, closing at $27,800. 160cbm TFDE Index: Dropped to $16,900.
  2. Atlantic Market (BLNG2 Houston-Cont): 174cbm 2-Stroke Index: Increased by $5,200, reaching $25,300.160cbm TFDE Index: Rose by $1,400, closing at $14,000.
  3. BLNG3 Houston-Japan:174cbm 2-Stroke Index: Slightly up by $1,400, closing at $32,700. 160cbm TFDE Index: Fell by $400, ending at $20,000.

Baltic Period Rates

Period rates suffered a decline across the board, with negotiations occurring privately and market direction remaining unclear:

  1. 6-Month Period: Down to $30,850.
  2. 1-Year Period: Decreased to $43,800.
  3. 3-Year Period: Published at $62,700.

LPG Market Overview

The US LPG market continues to widen the gap between BLPG1 and BLPG3. New fixtures over the last week or so, combined with a tighter tonnage list, have driven ex-US rates up although the Middle East market has been relatively flat. Steady sentiment bodes well for more gains in the rate.

BLPG Index Movements

  1. BLPG1 Ras Tanura-Chiba: Rate increased by $1.278 to $48.945. Daily TCE earnings rose by $1,505 to $28,910.
  2. BLPG2 Houston-Chiba: Rate surged by $8.417 to $107.25. Daily TCE earnings jumped by $7,168.
  3. BLPG3 Houston-Flushing: Rate increased by $3.25 to $58.5. Daily TCE earnings reached $57,542.

Sentiment Outlook

The US market’s strong performance offers optimism for continued rate improvements, while other regions remain subdued.

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Source: Baltic Exchange