US LNG exports round the Cape of Good Hope remain elevated in Jan: S&P Global data

The proportion of US LNG exports being sent round the Cape of Good Hope remains elevated in January as drought-related restrictions at the Panama Canal and attacks on shipping in the Red Sea force shippers to take the longer route to Asia.

Of total US exports of 4.55 million mt in the month to Jan. 17, around 280,000 mt was heading through the Panama Canal while 530,000 mt was being sent round the Cape of Good Hope, according to data from S&P Global Commodity Insights.

None was heading via the Suez Canal route to the Red Sea. The remaining tons were not yet specified.

In December, of total US LNG exports of 8.82 million mt, 790,000 mt was exported through the Panama Canal and 1.23 million mt went round the Cape of Good Hope, while 360,000 mt took the Suez Canal route.

Market share shifted away from the Panama Canal in November as restrictions on transits tightened, with just 430,000 mt taking the route that month, down from 930,000 mt in October.

The Suez Canal was the principal alternative route to Asia in November, but with the tensions in the Red Sea escalating in December, more volumes began taking the longer route round the southern tip of Africa.

Suez Canal transits rose to 1.22 million mt from 710,000 mt in October while Cape of Good Hope voyages stood at 500,000 mt and 580,000 mt respectively in the two months.

While exports are still routing through the Panama Canal, volumes taking the alternative route round the Cape of Good Hope are expected to remain elevated this month as Houthi rebels attacks on shipping in the Red Sea have continued.

Sources said the longer voyages around the Cape could lead to tightened vessel availability in the coming weeks. For now, freight rates have been cushioned by poor arbitrage economics and ample spot vessel availability.

Platts, part of S&P Global, assessed the US Gulf Coast to Northwest Europe LNG freight cost at 0.88 cents/MMBtu on Jan. 16, down 5 cents/MMBtu on the day. On the same day, the LNG USGC to Japan/Korea freight cost via Panama was assessed at $1.97/MMBtu, down 11 cents/MMBtu on the day. The freights to Japan/South Korea via the Cape of Good Hope and the Suez Canal were assessed at $2.80/MMBtu and $2.89/MMBtu respectively.

This put the three freight rates to Japan/Korea at the lowest levels seen since June. 19, while the freight to NWE was at the lowest level since June 13.