Several spot and time-charter fixtures for LNG carriers at daily rates in excess of six-figures have ushered in a much-anticipated stronger market, heightening shipowners’ already bullish mood.

Both modern gas-injection vessels and slightly older diesel-electric ships are achieving the healthy earnings.

Brokers reported this week that Korea Line has fixed Stena Bulk’s 173,000-cbm tri-fuel diesel-electric LNG carrier Stena Crystal Sky (built 2011) for a six to eight-month period, with options to extend the hire, at $120,000 per day.

The vessel is needed to cover Korea Gas Corp’s shipments from the US after two KC-1 containment system-fitted LNG newbuildings were forced to return to the yard for repairs.

Another charter attracting interest

The charter of one of The Cool Pool's 155,000-cbm to 160,000-cbm diesel-electric LNG carriers is also attracting interest. Broking reports list the unnamed vessel as fixed to the upcoming Ichthys LNG project from mid-November for a period of between two and five months at $130,000 per day.

Similarly, the 160,000-cbm Golar Celsius (built 2014) is reportedly fixed to Australia Pacific LNG for 60 to 70 days at the same rate.

Earnings for steam-turbine LNG ships are being pegged at shy of the $100,000-per-day mark but are being dragged up by the levels achieved by their more modern cousins.

One LNG broker said this week: “It is starting to feel like a proper market again. All the signs are pointing in the right direction.”

Brokers observed that spot action has been strongest in the Far East, with projects in the region producing well. Ships are being sucked into that basin from the Atlantic and Middle East, and they are tending to remain there. “Eastern markets are trading at premium to the west,” one said.

Tighter LNG shipping markets brewing for charterers

Shipowners and brokers also report that there is a wealth of enquiry for period charters ranging from several months to multiple years.

They list companies such as BHP Billiton, China National Offshore Oil Corp and RWE as among those most recently in the market for vessels to take on time charter.

Brazil’s Petrobras is seeking an LNG carrier to take on charter for three years, while energy major ExxonMobil has a requirement for a vessel specifying a hire period of one, three or five years.

High expectation

“No owner is going to take anything that is perceived to be below market for period because the expectation on the spot for the next two years is so high,” one broker said.

He explained that the next tranche of uncommitted LNG newbuildings are not due to emerge until first-half 2020 and, in the interim, new LNG supply, much of it with destination flexibility, is set to increase.

Flex LNG steers into a burgeoning spot market after a year of transition

Speaking about the prospects for LNG charter rates, outgoing Cool Pool general manager Morten Nielsen said: “I think the sky’s the limit. It is really difficult to say how high it can go but I think it is down to owners’ imaginations.”

Nielsen said the big difference on winter rate rises for this year is they are supply-demand driven whereas in the previous two years hikes have been mostly dependent on the gas price and the arbitrage between different basins.

“It is people who have to lift a cargo irrespective of price,” he said. “We have seen a change in the fundamentals for what is driving the rates.”

Nielsen said he thinks this is likely to hold rates up during the so-called "shoulder months" of 2019 where they traditionally weaken.

“For next the four months it will only go up,” he added.