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LNG shipping stocks: A calm week with a hidden storm

Last week, the UP World LNG Shipping Index (UPI) stayed at the previous level, losing just 0.01 points or 0.01%, closing at 148.06 points. This index tracks the performance of LNG shipping companies. The S&P 500 (SPX) index, representing U.S. stocks, experienced a gain of 0.77%. You can find both indices in the image below.

Week 49-2023: Chart of the UP World LNG Shipping Index with S&P 500 (Source: UP-Indices.com)

The past week seemed calm at first glance, with eight constituents experiencing moves below one per cent and three moves below two per cent. However, there is a rising tension between some investors regarding the increasing number of LNG vessels, as some new LNG plants delay the start of production. This could cause average long-term charters to decline back below $80kpd, which would affect the valuation of companies and potentially their dividends. The oldest steam vessels will be affected first and sent to scrap, while the DFDE/TFDE, especially on the spot market, will be under pressure as modern two-stroke vessels are paid at better levels. This concern may be behind the low performance of the LNG shipping stocks this winter.

Last week was also affected by the dividends ex-date of four constituents: Awilco LNG (OSE: ALNG), Excelerate Energy (NASDAQ: EE), Flex LNG (NYSE/OSE: FLNG), and Golar LNG (NASDAQ: GLNG). Two of them, Awilco and Flex, lost 7% and 6.6%, respectively, while the other two gained 0.9% (Excelerate Energy) and 0.5% (Golar).

Korea Line Corporation (KRX: 005880) gained the most, nearly 17%, followed by New Fortress Energy (NASDAQ: NFE), which rose by 7.2%. NFE is still on a positive wave after announcing news of its Mexico and Brazil projects. The Japanese trio of NYK Line, MOL, and “K” Line, which caused the UPI to rise last week, took a break.

The biggest loss of -8.2% was suffered by CoolCo after its Q3 earnings call, followed by ex-dividend Flex LNG, which lost 7%.
About: UP World LNG Shipping Index, established in 2020, is a rules-based stock index family designed to show and measure the performance of worldwide publicly traded companies involved in the maritime transport of liquefied natural gas (LNG). This unique index covers 18 companies and partnerships worldwide, like the USA, Qatar, Japan, Norway, South Korea, and Malaysia. The index covered over 65% of the world’s LNG carrier fleet in 2020. UP Index is a premium service. We offer freemium (the basic chart of the UP Index and S&P 500 index) and trial access to all charts.
Source: UP-Indices.com, By Tomas Novotny

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