Atlantic LNG: TFDE charter rates slide

Prompt charter rates for tri-fuel diesel-electric (TFDE) LNG carriers in both basins fell further on Tuesday, as a tighter inter-basin differential in recent days weighed on tonnage demand expectations.

The Argus Gulf Coast fob (AGC) May price fell to $8/mn Btu from $8.35/mn Btu at the previous close as it tracked northeast Asian and European delivered markets lower.

Northwest European prices for June deliveries had tightened their discount to corresponding northeast Asian des prices in recent days, closing the inter-basin differential for prompt US loadings.

But the differential widened again on Tuesday, with falls in European prices outstripping those in the Asian curve. This may increase the incentive for inter-basin flows and bolster tonnage demand in the coming months.

Spot charter rates for TFDE vessels located west of Suez dropped to $60,000/d on Thursday from $70,000/d at the previous close, while rates for TFDE vessels east of Suez fell to $55,000/d from $60,000/d. The decrease in freight rates was mainly due to increased vessel availability in the Atlantic amid a tight inter-basin differential, market participants said.

The risk of congestion at the Panama Canal had encouraged US offtakers delivering to Asia to take the longer journey via the Cape of Good Hope rather than Panama. The Argus Northeast Asia des (ANEA) July price was assessed at a $1.85/mn Btu premium to the northwest European des second half of June price on Tuesday.

The differential between the two basins was tighter than the additional shipping costs incurred by delivering a US cargo to northeast Asia via the Cape of Good Hope of $2.13/mn Btu, which was up from $1.56/mn Btu if going through the Panama Canal, based on spot Argus Round Voyage (ARV) freight costs.

That said, combined feedgas flows to the US' six operational liquefaction facilities in recent days suggest that the country's LNG exports could remain strong over the second half of this month, providing some support to tonnage demand compared with recent years. Feedgas nominations averaged 10bn ft³/d on 1-17 May, down only slightly from a record 10.4bn ft³/d in April.

Nominations did slip to 9.4bn ft³/d on 11-16 May, first driven by a fall in Cameron flows to 1.39bn ft³/d on 11-14 May, from 1.84bn ft³/d earlier this month, and then in Corpus Christi flows to 1.7bn ft³/d on 14-16 May from 2.35bn ft³/d. But Cameron and Corpus Christi feedgas nominations were back up to 1.93bn ft³ and 2.36bn ft³, respectively, on Monday.