RECOVERY IN LNG MARKETS
The last week showed a remarkable recovery in LNG stocks: +4.1%. We have to admit that the majority of this performance was contributed by a single stock, namely TK LNG Partners which were able to solve the US-sanctions against their JV fleet with Cosco. But also Golar LNG was able to recover from recent lows.
We have to remember: LNG carrier stocks were underperforming all other shipping sectors by 30% on average since the beginning of this year. Now it seems that this downward trend may have stopped. Since September the sector has outperformed the broad shipping markets by 5%. Strong spot markets with TCE around 150k for modern vessels supported the move. But the recovery remains fragile as long as the prices for natural gas in Asia remain at current levels around 6.5 USD/MMBtu. According to our calculations, we need another 1-2 USD/MMBtu to open the arbitrage window again. It remains to be seen whether this winter in Asia will be cold enough to encourage higher prices.
Product tanker stocks retreated by 2%, whereas the liner- and container-sectors continued their rally. We are not sure how long this move will last after the high season has finished.
Our trading strategies "Calima" and "Notos Maritime Strategy Index" are currently overweight in LPG and LNG. Both strategies surpassed 35% performance y-o-y last week, outperforming the Dow Jones Global Shipping Index by more than 20%.
The "Notos Maritime Sentiment" is stable around 0.4 index points, the highest level this year, indicating further tailwinds for the industry.