Rising demand for gas in Asia along with increasing oil price and electricity prices in Europe pushed NBP and FE gas prices to levels not seen in a third quarter since 2014.
However, rates were marginally less in July and early August before gradually heading again towards all-time high rates of USD 175,000 per day. In fact, LNG trade is estimated to have increased by 6% in the first nine months of 2018 compared to 2017.
Specifically, LNG imports to China increased by about 45%, with China being the world’s largest importer of gas, having surpassed Japan in Q3 2018. In addition, imports to South Korea increased by 17% and India 12%. LNG imports to Japan remained still compared to same period last year.
Moreover, 42 newbuilding orders have been placed year to date of which, around 27 are speculative. Awilco LNG also added that the current orderbook for LNG vessels above 100,000 cbm is 93 vessels, of which 37 are potentially available for contract.
Despite the fact that orderbook represents almost 20% of the fleet, market analysts believe that the 91 MTPA of new LNG production planned to start up from 2018 to 2021, will need more vessels than the current available tonnage.
In addition, spot market rates are at an all-time high and as we go into the winter season, activity is possible to increase. More specifically, in the medium-term, 91 MTPA of new LNG production capacity is expected to begin in 2018 to 2021. About 50 MTPA of the new production is out of the US, which will probably increase average sailing distances.
Nevertheless, volatility and seasonality should also be expected. In fact, the company notes that in the long term recent liquefaction FIDs are promising, and will meet the growing demand for gas.