Global LNG shipping - costs 2021

After a year of low LNG shipping costs caused by the effects of the Covid-19 pandemic, an unusually tight market during the 2020/21 winter resulted in a surge in charter rates. This trend reversed in early 2021 as an oversupply of carrier capacity and a fall in demand sent charter rates tumbling. However, by mid-March, strengthening demand in Asia allowed for a recovery in charter rates. Freight rates followed a similar trajectory although were supported by rising fuel oil prices in Q1 2021. Looking ahead, an increase in demand for carrier capacity and increasing oil prices will result in the recovery of costs in 2021. Key themes in this shipping cost update include the following: • The volatility of recent spot/short-term charter rates • The recovery in orders in the second half of 2020 and its effect on new build prices • Panama Canal tolls for LNG were increased by 8% in 2020 • Suez Canal rebate was increased by 5% temporarily from April 2020 until July 2020