LNG carrier spot rates could remain depressed until 2027: Poten
The charter market for LNG tankers is extremely weak, dragged down by record newbuilding deliveries and project delays.
The spot market for LNG carriers is extraordinarily bearish and, on a webinar, last week Poten & Partners Sergio Chapa and Irwin Yeo went into great detail on the current situation and took a look out into what is clearly an uncertain future.
Chapa, Poten’s Senior LNG Analyst (Americas) explained that the present market weakness, with spot charter rates around $32,000 per day for modern 174,000 cu metre MEGI and XDF vessels described as “subdued”, in the aftermath of a spot market that was “crashing…in the aftermath of a warm winter” in end 2024/ early 2025.
He pointed to a “big supply of LNG vessels being unused”, at that time, and “therefore charter rates dropped.” He pointed out that “this year, you are seeing charter rates rebound, but they are still below historical norms.”
Yeo, Senior LNG Analyst (Asia-Pacific) delved deeply into charter market dynamics, contrasting the current charter markets “which have been in freefall” with those of 2022 when they surged following the commencement of hostilities in the Ukraine , and the shift away from Russian gas cargoes, also a time that “energy security was a concern” and shippers “wanted to lock in tonnage on long term deals.” But now, newbuilds ordered in response to that boom are being delivered.
Yeo characterised the present charter market as “extremely weak, mainly due to a surge in newbuild deliveries”. He suggested that spot rates could likely remain depressed well into 2026, when a record number of newbuild deliveries is expected, at a time of LNG project delays, and possibly into the first half of 2027.”
He stressed that even when new project do come online, such as Golden Pass near Sabine Pass in Texas, “they ramp up slowly…so they can’t soak up the [shipping] tonnage” and also pointed to lower ton-mile demand due to a preponderance of short term charters in the Atlantic Basin, “with many US cargoes headed to Europe.”
A cliché among all manner of economists is the phrase, “But on the other hand”. Though using different phraseology, Poten did point to potential positives that could brighten the desultory picture. Scrapping of existing LNG vessels could play a role; Yeo noted that a record-setting number of LNG vessels had already been scrapped in 2025. Market factors including shifting price spreads could also play a role, along with unexpected disruptions from outages at, generally older, coal-fired power plants.
Quicker than expected ramp ups of projects could also add fuel to the market; Venture Global’s Plaquemines project on the Mississippi River, south of New Orleans, was mentioned specifically by Poten. Present plans call for Venture Global LNG to commission and start exporting LNG from Plaquemines Phase 2 on a spot basis, according to industry reports.
In this regard, it’s worth mentioning the views of a different consultant, Rystad Energy, whose Mike McCormick,a Partner in the firm’s Energy Advisory practice, in a recent “Let’s Talk Energy” podcast, described the LNG industry in the States as “one of the biggest positives” to come out of the Trump administration’s pro fossil-fuels policies that have been emerging in the past eight months.
McCormick highlighted the important role of LNG projects, including some whose Final Investment Decision had been stalled during the final year of the Biden administration, in discussions of US foreign trade. “US LNG exports have taken center stage in trade negotiations,” Rystad said. McCormick emphasized that: “This LNG wave is actually key to some of these trade deals that are happening now, or are waiting to happen.”
source: www.seatrade-maritime.com
