A number of modern ships have been offered to prospective charterers participating in cargo tenders from LNG producers in Australia and Abu Dhabi at $35,000-45,000/day, representing bearish market pressure, according to shipping sources on 3 March.
“Some owners have been aggressively offering in order to secure business,” one shipbroker said, while other owners have shown an increasing willingness to absorb the extra costs involved in cooling down warm vessels.
The operator of the Darwin LNG plant, ConocoPhillips has offered cool-down volumes prior to the tendered cargo scheduled to be loaded on 6-7 April. This has consequently led a number of shipowners with idle, warm vessels around Singapore to offer to the prospective cargo bidders at Darwin. Shipowners are prepared to transact for the cool-down volumes directly or account for the cost of the volumes in charter agreements, ICIS understands. The Darwin tender award is expected on 6 March.
With the cost of cooling down at Darwin understood to be much more attractive than Singapore, a number of shipowners are offering in the mid-to-high $30,000s/day.
Most ships under contention hold at least 160,000 cubic metres (cbm) of storage capacity, but there is a distinction between most of the modern diesel electric ships that have been offered and some of the older tonnage in the competition. Most tri-fuel diesel electric (TFDE) shipowners expect rates in the low $40,000s/day, shipbrokers said, while those with the older vessels with higher boil-off rates expect rates around the mid-$30,000s/day.
In the current market, there is not much benefit in chartering fuel efficient TFDE vessels, one shipbroker said. “Fuel costs are quite low and most trades are likely to be intra-basin which reduces the potential bang for your buck on TFDEs,” the broker said.
Nonetheless, the number of TFDEs competing for the Darwin LNG tender is thought to outweigh steam-turbine ships. The relative TFDE oversupply combined with the need to stay competitive with steam-turbine ships has caused the TFDE segment to witness greater downward charter pressure.
Abu Dhabi’s ADGAS LNG cargo tender has led to five sub-charters subject to tender award but only from a pool of two available vessels. The 126,000 cubic metre (cbm) WilGas - a 1984 built steam turbine vessel - is understood to have been reserved for one tender participant. The 160,000cbm Corcovado meanwhile - a 2014 built TFDE vessel - has been reserved by four separate tender participants.
The WilGas was sub-chartered last month in the low-to-mid $20,000s/day to Switzerland-based Trafigura to transport volumes from Adu Dhabi to Dubai. While this short single voyage sub-charter not lasting more than two days would not be representative of the wider steam-turbine market it provides a good indication of the overall shipping economics that the Corcovado shipowner, Cardiff Marine has been faced with. Traders with their own tonnage are also understood to have competed in the ADGAS tender.
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