Shipping rates for liquefied natural gas (LNG) are at their lowest point since 2010 as the number of LNG vessels worldwide rises, Bloomberg reports.
Andrew Buckland, a London-based analyst at Wood Mackenzie Ltd, noted that rates now hover around $50,000 per day and will probably head lower before recovering, compared to $140,000 back in 2012.
Tatsuo Osakabe, managing director of shipping broker Fearnleys Japan, predicted that rates could fall to as low as $40,000 per day.
“I’d expect prices to stay in this ballpark for a couple of years before they start turning around,” said Hal Miller, president of consulting company Galway Group.
Companies that anticipated a boom in U.S. LNG exports and heightened rates after the 2011 Japanese nuclear crisis have reportedly driven up the number of LNG ship orders in recent years, a move that has filled the market with extra capacity.
Buckland also noted that LNG ships ordered three or four years ago are now having difficulty competing against newer and more fuel-efficient vessels.
Though Osakabe predicted that the market could stay depressed until mid-2016, he said “once the U.S. projects start up and their cargoes move into Asia, it could help the market pick up.”
It was reported late last year that LNG as a marine fuel was rapidly rising in China as it continues to increase its market share in LNG carrier newbuilds.