LNG bunker price rally amplifies freight gains for LNG-fuelled clean tankers

During the week of September 7-11, LNG-fueled clean tankers experienced a significant boost in freight rates, surpassing conventional rates for the first time. This surge was primarily driven by a sharp increase in LNG bunker prices. Platts, a leading energy market data provider, reported that LNG-fueled clean tanker freight rates for routes like Jubail-Chiba, Ruwais-Yokkaichi, and Ras Tanura-Yokohama rose by approximately 33%, compared to a 25% increase in conventional freight rates.

The divergence between LNG and conventional freight rates was especially notable on Persian Gulf-Japan routes, indicating the sensitivity of alternative-fueled ships to changes in bunker prices. The rise in LNG-fueled Platts LNG Base Rates for the Jubail-Chiba route, for example, climbed from $36.66 per metric ton on September 7 to $38.89 per metric ton on September 11.

This was accompanied by a corresponding increase in Worldscale daily assessments, from w520 to w650 over the same period. While East of Suez VLCC freight continued to decline, market participants attributed the gains to limited prompt tonnage rather than immediate concerns over the Strait of Hormuz. The analysis also noted a 15% increase in LNG-equivalent rates on the Med-Med benchmark route, rising to $20.85 per metric ton on September 11.

The sharp rise in Singapore and Rotterdam LNG bunker prices, from $1,410/mt to $1,537/mt and $1,403/mt to $1,561/mt respectively, further underscored the impact of higher bunker prices on freight costs. These developments highlight the importance of considering bunker-price sensitivity when evaluating the economics of LNG-fueled clean tankers.