Spot charter rates for tri-fuel diesel-electric (TFDE) LNG carriers in the Atlantic basin rose sharply on Thursday, as a wide inter-basin arbitrage coupled with quick US exports tightened tonnage availability.
Rates for a TFDE carrier fixed west of Suez on a prompt basis climbed to $118,500/d on Thursday from $108,500/d at the previous close, and have mostly risen since 1 December when they were assessed at $100,000/d.
Strong gains for northeast Asian delivered prices in recent days have not been matched by European des markets, which has widened the US fob arbitrage for loadings in January and could reduce vessel availability in the Atlantic. The inter-basin arbitrage was also sufficiently wide to offset further increases to shipping costs prompted by the higher charter rates, although spot vessel availability was very limited, market participants said.
Indications for January fixtures west of Suez had also been heard as high as $200,000/d, market participants added, as Panama Canal congestion had prompted longer journeys to the Pacific, with more vessels taking routes via the Cape of Good Hope or Suez Canal. Assuming vessels are travelling at an average speed of 19.5 knots, delivering a US Gulf coast cargo to northeast Asia via the Suez Canal requires 30 days and around 24 days via the Cape of Good Hope, compared with 21 days using the Panama route. There were three vessels waiting to enter the Panama Canal on Thursday and one more transiting the passage, while four more were expected to arrive over the next couple of days, vessel-tracking data show.
Quick US LNG output for delivery to northeast Asia could continue to keep vessel availability tight in the coming weeks, but some firms with long-term charters have taken advantage of the high rates and started to engage in subletting activity, market participants said. Although only a handful of sublets had been heard in recent days, some added, which was unlikely to significantly boost tonnage availability at present.
Vessel availability could remain tight later into next year, as the Argus Gulf Coast fob (AGC) six-month curve continued to track northeast Asian delivered prices on Thursday, with forecasts for cold weather in the region and expected coal-plant closures lifting demand. The EIA lifted its forecast for US exports in February-March on Wednesday, with LNG gross exports from the region expected at 9.52bn m³/d across the period, up from 9.04bn ft³/d in its November forecast.
Fog may also close the waterway to the 25mn t/yr Sabine Pass export facility in the coming days, which could prevent empty vessels from loading at the facility and laden vessels from leaving it. Fog had last closed the passage on 27-29 November.
