News
19/11/25
Further rise in LNG freight rates spurs repositioning
London, 19 November (Argus) — An extended rise in Atlantic basin LNG spot
charter rates has further widened the freight spread between basins,
incentivising shipowners to ballast their vessels in the Pacific to the US Gulf
coast via the Panama Canal to capitalise on higher Atlantic rates. Argus ' ARV5
round-trip spot charter rates for intra-Atlantic basin voyages rose to
$110,000/d on Wednesday from $86,000/d on Friday, when rates had surged by
$55,000/d in less than a month . The corresponding ARV4 rate for intra-Pacific
voyages rose to $69,000/d from $60,000/d in the same period. The steeper rise in
Atlantic rates appears to have incentivised some owners to reposition their
Pacific basin LNG carriers to the US Gulf coast, even though they would be
responsible for the ballast leg and any associated Panama Canal transit fees.
The empty 174,000m³ Aristos I and the empty 173,400m³ Kinisis have both operated
in the Pacific basin in recent months, but are travelling eastwards from
northeast Asia and have declared for Balboa, the Pacific entrance of the Panama
Canal. These two vessels on Wednesday were travelling at 17.5 knots and 20
knots, respectively, quicker than the typical maximum speed of 16.5 knots for
LNG carriers utilising natural boil-off gas, implying the ships are either
supplementing with fuel oil or using a forcing vaporiser to regasify more LNG to
run the vessels. The faster-than-usual speeds indicate the vessels are looking
to arrive in the US Gulf for first half of December loading, the current premium
window in the market. Based on prevailing speeds, both the Aristos I and Kinisis
could arrive in the US Gulf by 10 December, assuming there is no congestion at
the Panama Canal. The latest fixture heard in the market for a first-half
December loading in the US Gulf closed at $145,000/d, with US LNG producer
Cheniere sub-letting a vessel to German utility EnBW, market participants said.
If the Aristos I and Kinisis are chartered out on similar rates, the ballast leg
costs — accounting for the loss of Pacific basin income at $69,000/d, boil-off
usage at around $10/mn Btu — could be recovered with an Atlantic basin charter
of around 42 days, should the owners be able to secure a northbound Neopanamax
slot at the auction minimum bid of $100,000, based on Argus calculations ( see
table ). If the owners have already secured a regular Neopanamax slot, which
typically costs around $665,000 for a ballast transit, its breakeven Atlantic
basin charter would be even lower at 40 days. The most expensive northbound
Neopanamax slot awarded to an LNG carrier so far this year closed at over $1.7mn
in August, for the 174,000m³ Maran Gas Kimolos . If the shipowners need to bid
at these levels, the breakeven charter would need to be at least 61 days. But
the charter length required to make up the cost of the ballast leg — if owners
are able to obtain rates at or higher than $145,000/d — has more than halved
compared with a week ago. Moving Pacific basin vessels to the Atlantic was too
risky last week, but with early-December fixtures closing at well over
$100,000/d at present, the financial incentive has improved to a point where
owners may take the risk, market participants said. If more vessels choose to
reposition from the Pacific to the Atlantic and increase available supply, rates
would likely come under pressure and the incentive to ballast to the US Gulf
would fall again. Several empty vessels intended for the 14mn t/yr LNG Canada
plant are holding in the mid-Pacific, and would be able to arrive in the US Gulf
via the Panama Canal in the first week of December under the same assumptions.
By Bonnie Lao Pacific to Atlantic ballast breakeven Scenario Breakeven days
Atlantic rate at $145,000/d, Pacific at $69,000/d Loss of Pacific income +
regular neopanamax transit fee 40 Loss of Pacific income + minimum neopanamax
bid 42 Loss of Pacific income + maximum 2025 neopanamax cost 61 Atlantic rate at
$110,000/d, Pacific at $69,000/d Loss of Pacific income + regular neopanamax
transit fee 72 Loss of Pacific income + minimum neopanamax bid 74 Loss of
Pacific income + maximum 2025 neopanamax cost 115 Atlantic rate at $85,000/d,
Pacific at $55,000/d Loss of Pacific income + regular neopanamax transit fee 90
Loss of Pacific income + minimum neopanamax bid 94 Loss of Pacific income +
maximum 2025 neopanamax cost 150 *assumes boil-off costs of around $10/mn Btu
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