Two Qatari LNG carriers head to Canary Islands for bunkering: CAS

Qatar's LNG carrier Al Ghariya became the second out of three of its LNG-laden carriers, previously en route to the Suez Canal, that changed course and was heading toward Spain's Canary Islands for bunkering, according to S&P Global Commodities at Sea Jan. 19.

The development, which signals a longer voyage via the Cape of Good Hope, came as day rates for the Atlantic Basin LNG freight market remained bearish amid weak spot LNG demand from Asia Jan. 18.

Al Ghariya was sailing southwest of the Indian Ocean at a speed of 18.6 knots and estimated to arrive at Las Palmas, Spain's Canary Islands, on Feb. 4, according to CAS at 0513 GMT Jan. 19.

Al Nuaman, the first of three Qatari LNG carriers that headed toward the Canary Islands at a speed of 19 knots, was also estimated to arrive Feb. 4 for bunkering, while the third carrier Al Huwaila, which was also sailing southwest at a speed of 17.3 knots with the other two carriers, has not changed its destination from the Suez Canal, according to CAS.

The three LNG carriers had passed the Gulf of Aden, which leads to the Red Sea, as of Jan. 16, having paused for a few days offshore the southwest of Oman, according to CAS.

A fourth Qatari LNG carrier, the unladen Al Rekayyat, was sailing along the offshore east of Oman and estimated to arrive at Qatar on Jan. 22. It had paused in the Red Sea Jan. 12 after passing East Port Said along the Suez Canal on Jan. 10, according to CAS.

Reroutes shipping

The route taken by the three Qatari LNG carriers comes as a growing number of major international shipping companies halted transit via the Red Sea, as the security situation off Yemen deteriorated following US-led strikes on Yemen's Houthi rebels in the evening of Jan. 11.

Dozens of tankers have rerouted since the US- and UK-led Combined Maritime Forces, a naval coalition of 39 countries, launched counterstrikes against the Houthis in Yemen late last week, prompting commercial maritime associations such as BIMCO and Intertanko to advise their members to keep commercial ships away from the theater of conflict.

As a direct result of the latest developments, ports in Africa including the Canary Islands, have emerged as potential stops for ships to take bunker fuel as an increasing number of cargoes from the Persian Gulf that are destined for Europe transit via the Cape of Good Hope.

However, day rates in the Atlantic Basin LNG freight market slumped Jan. 18. Platts assessed the rate for a TFDE LNG carrier $10,000/d lower day on day at $45,000/d Jan. 18 with a ballast rate of 100%, while day rates for a two-stroke LNG carrier fell $5,000/d to $65,000/d with a ballast rate of 100%, S&P Global Commodity Insights data showed, widening the spread between Atlantic TFDE and two-stroke LNG carriers to $20,000/d.

Asian spot LNG prices extended their downtrend Jan. 18 on continued weak demand from key consuming regions amid ample availability of spot cargoes in the market.

Platts assessed March JKM at $9.433/MMBtu Jan. 18, down 27.4 cents/MMBtu day on day, S&P Global data showed.

Higher costs

Transit volume through the Suez Canal is down 37% this year through Jan. 16, compared with the same period a year earlier, while the transit volume at the Cape of Good Hope surged to around 54% above last year's level, as ships were diverted to avoid the Red Sea, the International Monetary Fund's Port Watch alert on Jan. 19 said, citing satellite-based estimates.

Although the impact of shipping disruptions varies across countries depending on their reliance on Red Sea transits, some developing countries may be more affected, it added.

The countries with the highest share of total merchandise imports and exports passing through Bab el-Mandeb Strait are those located in East Africa near the Red Sea, West African countries with strong trade links with Asia, especially in agricultural and mineral products, as well as South Asian countries that export goods like apparel and textiles to Europe through the Red Sea, the IMF said.

"Countries in this group may be affected by longer transit times and higher shipping costs, although the impact is likely to vary depending on trade openness and proximity to the Red Sea," it added.

However, the IMF said that while the disruptions have raised shipping costs, there is only anecdotal evidence of global supply chain pressures, and even a widely tracked measure compiled by the Federal Reserve Bank of New York did not indicate these supply chain pressures as of December.