LNG Shipping Rates Fall to a 7-Month Low as Gas Prices Drop
LNG freight rates for Atlantic Basin spot LNG cargoes, slid to below $50,000 per day on Thursday, the lowest level in over seven months, as natural gas prices in Europe drop with peak winter demand behind us.
The Spark30S Atlantic LNG freight rates, assessed by Spark Commodities, slid to below $50,000 per day today and were down by 65% year to date, according to Spark Commodities data quoted by Montel.
LNG freight rates have been falling since January and are now at their lowest level for this year, Spark Commodities says. In early January, the Atlantic spot LNG freight rate exceeded $140,000 per day.
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The record for the Atlantic spot LNG freight rates was hit in early November 2022, when Europe was preparing for the winter with very low Russian supply and skyrocketing energy prices. Back then, the shipping rate hit a record high of almost $485,000 per day.
Sellers are also more willing to free vessels, a source in the LNG market told Montel.
“Less cargo opportunities means it’s less valuable to keep vessels in the portfolio,” the source noted.
In Europe, the front-month futures at the TTF hub, the benchmark for Europe’s gas trading, slumped this week to below 40 euros ($43.52) per megawatt-hour (MWh), the lowest price since July 2021, as temperatures were rising, wind power generation was strong, LNG supply ample, and gas inventories way above the average for the end of the winter.
As of March 21, gas storage sites across the EU were 55.6% full, according to data from Gas Infrastructure Europe.
If Europe has already reached the turnaround in gas storage, that is withdrawals have mostly ended, this would be the earliest since 2012 with storage sites 55% full, compared to 29% last year and 26% in 2021, Ole Hansen, Head of Commodity Strategy at Saxo Bank, said this week.
