LNG Trade to Increase by 10% in 2020

Dominated by new U.S. volumes, liquefied natural gas (LNG) trade is expected to increase by 10 percent per annum from 290 million tons in 2017 to around 388 million tons in 2020, said Golar LNG.

According to industry analysts, ton mile demand is expected to increase by more than 40 percent over the same time frame. Annual fleet growth of 5 percent through to 2020, will, according to industry analysts, not be sufficient to meet this demand.

Leading brokers continue to expect a 30-40 vessel shortfall. As of today there are minimal prompt available vessels worldwide and it is no longer possible to order a vessel for delivery before 2021. Multi-month and multi-year contracts continue to present themselves adding upward pressure on rates.

Increasing U.S. LNG production and start-up of Yamal T2 together with strong Asian demand and rising ton miles prompted a number of multi-month and multi-year charters ahead of the summer cooling season.

Vessel availability declined and rates increased, briefly surpassing their 2017 winter highs. Activity then eased over the summer months before regaining its positive momentum in September as strong end-user demand and rising oil prices fed through to increasing LNG prices, vessel fixtures, and spot rates approaching $100,000 per day.

Newbuild deliveries also began to decline and commercial terms for Pacific basin fixtures exceeded those in the Atlantic for the first time since 3Q 2014. JKM and European gas prices ended the quarter up 86 percent and 43 percent respectively year-on-year, once again driven by strong demand from China and Korea.