LNG Shipping Index Experiences Temporary Dip

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  • The UP World LNG Shipping Index (UPI) dipped by 4.25% in the week of June 15th, 2024, closing at 155.45 points.
  • This stands in contrast to the S&P 500 index, which gained 1.58% during the same period.

Market Movers

  • Nakilat, Golar LNG, and Awilco LNG: These companies defied the downward trend, each experiencing a growth of around 3.5%.
  • Flex LNG: The company witnessed a significant decline due to ex-dividend date and expectations of a weaker second quarter.
  • Japanese Shipping Companies: “K” Line, NYK Line, and Mitsui O.S.K. Line all contributed to the index’s decline.
  • Other Declines: New Fortress Energy, SM KLC, MISC Bhd, Shell, BP, Chevron, and Cool Company also saw a decrease in their share prices.
  • Exmar: The only company besides Nakilat, Golar LNG, and Awilco LNG to experience growth (2.1%).

Reasons for the Dip

  • End of Off-Season Buying: The initial rise in UPI due to Asian buyers capitalizing on the off-season has subsided.
  • Ex-Dividend Date: Flex LNG’s decline coincided with its ex-dividend date.
  • Weaker Second Quarter Expectations: The market anticipates a weaker second quarter for Flex LNG.

Reassurance and Outlook

  • The decline is seen as temporary, with a potential rebound expected as the summer season progresses.
  • Spot rental rates for LNG tankers are increasing, indicating rising demand with the approaching summer.
  • The pause in UPI’s decline near its previous support level suggests market stability rather than a long-term downward trend.

The LNG shipping sector appears healthy despite the temporary dip in the UPI. The positive performance of some companies and rising spot rates suggest a potential upswing in the coming weeks.

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Source: LNGShippingstocks