NE Asia LNG demand slump hits shipping hard
Falling LNG demand in the traditional major LNG markets of Japan and South Korea, and slower than expected demand growth in China, is particularly bad news for LNG shipping. This is because alternative markets tend to be closer to LNG supply sources requiring less ship capacity to get the LNG to market. Even without lower demand in NE Asia, demand for shipping would have been hit by the start up of new supply in Australia, displacing longer-haul imports from elsewhere. The reduced demand for shipping comes at time when the supply of LNG ships is growing rapidly. The result has been reduced fleet utilisation and short-term charter rates languishing around US$30,000 per day. With a large orderbook of LNG ships still to be delivered, more new Australian LNG supply to come on stream and Japanese and South Korean demand set to fall further charter rates will remain under pressure.