US LNG exports set for record-high in March

Declining freight rates support a potential record-high level of US LNG exports this month, particularly to northwest Europe, data services provider Kpler said in a March 18 research note.

The company estimated that freight rates in the Atlantic basin collapsed from around $322,000/day two months ago to a current rate of just $21,000/day.

“Freight rates even went lower than $17,000/day on March 5,” Kpler found. “These levels are comparable to the summer of 2020 when more than 100 US cargo cancellations had brought rates down to $18,000/day.”

As a result of the lower freight rates, US LNG exports are supported and are expected to reach a record-high this month. Exports during the week of March 1 set a record of 1.63mn mt, beating the previous record set in December by about 0.08mn mt. Kpler estimates that US LNG exports are on pace to reach 1.88mn mt this week.

Demand from the northwest European market will account for most of the export growth this spring. All told last year, the Asian economies drew heavily on US LNG Exports, though the European market ran a close second.

“While it is still too early to break down US LNG exports by destination, lower freight rates dramatically reduce the cost of shipping those cargoes across the Atlantic,” Kpler’s research note added.

Kpler estimates that US LNG is feeding a supply-side deficit in the European market. The natural gas storage level in the Netherlands is at about 18% capacity, while Spain’s is closer to 62% full.

Total LNG exports last year improved over 2019 levels by 31%, data from the US Energy Information Administration show.