LNG shipping stocks: Cautiously optimistic for growth ahead

The UP World LNG Shipping Index saw a slight dip last week, declining by 0.89% as spot charter rates remain stagnant despite seasonal expectations for increases. While geopolitical risks persist, impacts have been localized. Despite the index’s decline, more than half of the companies led by Excelerate Energy showed gains. Notable losses included New Fortress Energy and Korea Line Corporation. The week ahead remains cautiously optimistic with historical trends hinting at a potential rebound.

UPI & SPX

Last week, UPI, which tracks listed LNG shipping companies, lost 1.49 points, or 0.89%, closing at 167.13 points. The S&P 500 index gained 1.11%. The chart below shows both indices with weekly data.

Week 42-2024: Chart of the UP World LNG Shipping Index with S&P 500 (Source: UP-Indices)

Broader view
The past week did not bring much news to stir up share prices in the LNG shipping sector. As a particular negative, we can perceive that the regular rise in spot tanker charter rates has still not arrived. While some talk of a new normal, we still see this as a temporary exception. But once again, after years, it is confirmed that shipping is an industry that rightly prefers long-term contracts. These average over $84,000 per day for UPI companies, while spot rates are around $60.000 per day.

The geopolitical risk of conflict still remains. Yet last week’s declining companies were not in the same geographic area.

Constituents
UPI did lose for the second week in a row, but the losses were primarily slight declines. As we show in our Chart of the week, UPI is in a position where gains have followed on the past three occasions. In addition, more than half of the companies grew. So let’s start with them, even if they didn’t reach dizzying heights.

Excelerate Energy (NASDAQ: EE) achieved the biggest growth, erased its previous loss with Friday’s rise and added 2.1% overall.
Nakilat (QSE: QGTS) and MISC (KLSE: 3816) followed with gains of 1.4%. Awilco LNG (OSE: ALNG) then prepared to break through the NOK 7.42 mark, which has resisted for the fifth week, with a 1.1% rise. Cool Company (NYSE/OSE: CLCO) continues its slow but steady rise, adding another 1.2%. Dynagas LNG Partners (NYSE: DLNG) also gained a percentage point, leaving the lower end of the growth gap very unobtrusively. Other gains were less than one per cent and involved Mitsui O.S.K Lines (TSE: 9104), Exmar (BSE: EXM), Golar LNG (NASDAQ: GLNG) and Chevron (NYSE: CVX).

The decline was again led by New Fortress Energy (NASDAQ: NFE), which wrote off 7.2%. On the positive side, however, despite the relatively significant loss, the stock is now going sideways for a third week. We’ll see if this is a trend change or a rest before further declines. We are leaning more towards the first option.

Second in order of magnitude of declines is Korea Line Corporation (KRX: 005880), which, with a 4.1% drop, has lost the chance to continue its choppy uptrend. It’s not that it can’t grow, but that growth will no longer occur within the previous broad-based trend.
Capital Clean Energy Carriers (NASDAQ: CCEC) and Tsakos Energy Navigation (NYSE: TEN) hope to continue growing, though they have lost 3.3% and 3.1% over the past week.

BP (NYSE: BP) lost 2.3%, and NYK Line (TSE: 9101) lost an equal two per cent. Other declines have been less than two per cent: “K” Line (TSE: 9107) lost 1.9 per cent, and Flex LNG (NYSE/OSE: FLNG) lost 1.7 per cent. Both companies are heading sideways. And that’s pretty much it. Let’s see if UPI really grows this week as expected.

Established in 2020, the UP World LNG Shipping Index is a rules-based stock index family designed to measure the performance of worldwide publicly traded companies involved in the maritime transport of liquefied natural gas (LNG). This unique index covers 19 companies and partnerships worldwide, representing over 65% of the world’s LNG carrier fleet in 2020. The UP Index offers premium services with freemium and trial access to charts. With Freemium, users can access the basic UPI vs S&P 500 chart after email registration. The trial includes full access for fourteen days.
Source: By Tomas Novotny, UP-Indices.com