Drewry: LNG shipping rates to remain under pressure in 2017

LNG shipowners are bracing for another tough year as charter rates are expected to remain under pressure for the year 2017, the shipping consultancy, Drewry said in its report. 

Spot rates West of Suez firmed up at the start of the year due to seasonal demand for LNG starting the year on a positive note, and the momentum was expected to continue.

However, Drewry notes that the fundamental of LNG shipping market are not strong enough to sustain this recovery for long, expecting the rates to come under pressure as seasonal demand starts dropping from April onwards.

“Moreover this year the LNG fleet is forecast to grow at its fastest pace in five years at 13 percent, surpassing anticipated LNG trade growth of 7 percent,” Drewry’s report shows.

The consultancy believes that the worst for LNG shipowners is not over yet as it expects the spot rates to remain under pressure at an average of US$36,000 per day.

“Although the short-term outlook for this year is weak, we remain bullish about the medium and long-term outlook because of expanding worldwide LNG export capacity,” Drewry’s Shresth Sharma said.

Sharma adds that the fleet growth is to start slowing down from next year while tonne-mile vessel demand will improve as US LNG exports pick up the pace and Australian plants start operating at full capacity. This is when the rates are also expected to start improving.

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