LNG demand growth over the last year has spurred an uptick in activity throughout the LNG markets resulting in higher rates, a rising number of newbuild orders and record volumes of chilled fuel on the water.

In their quest to meet the rising energy demand an increasing number of countries are turning to natural gas, and liquefied natural gas is seen as the preferred means of transporting required volumes.

Data provided to LNG World News by VesselsValue shows that interest in the LNG markets is growing as rates for term and spot fixes topped six figures towards the end of last year.

Charter rates hovered around the $110,000/day from the second half of October before dipping in the second half of December.

Additional drivers of this growing interest in the LNG markets are the cargo volumes on the water that hit new peaks, as well as an increase in the number of orders large players are placing at yards in Korea and China.

The number of ships used to carry LNG has surged upwards, with the additional supply of ships expected to commoditize the marketplace and lead shippers away from long-term contracts.

“This will create a more robust spot market, which has pushed down the average shipping costs in other markets. The lower shipping cost encourages more exports, which causes occasional rate spikes. This, in turn, leads to more orders, and a more vibrant and robust marketplace,” according to VesselsValue.

Monaco-based GasLog throughout last year stressed that the strong LNG demand, new sources of supply coming onstream and limited availability of shipping capacity over the near-term are combining to create the potential for the strength in LNG shipping spot rates to be sustained through at least early 2019.

The shipper noted that further shipping capacity will be needed over and above the current orderbook to satisfy projected demand from 2021 onwards.

VesselsValue notes that LNG demand is expected to rise from 350 mtpa to 400 mtpa through 2022, and with it the demand for large LNG vessels.

Interest in newbuild orders is rising, although the combined capacity ordered in 2018 is less than was booked in 2014, VesselsValue said. Ship owners appear to be exercising better discipline in ordering during this cycle as a more detailed analysis of the supply and demand situation is possible than at any point in history.