Last week, the UP World LNG Shipping Index (UPI) lost 2.92 points or 1.77%, closing at 163.28 points. This index tracks the performance of LNG shipping companies. The S&P 500 (SPX) index, representing U.S. stocks, experienced a gain of 1.38%. You can find both indices in the image below.
Week 6-2024: Chart of the UP World LNG Shipping Index with S&P 500 (Source: UP-Indices.com)
UPI nicely reflects the development of its constituents – a new range is set above the previous one despite some constituents moving dramatically last week. The main moves were made in the second half of the week, especially on Friday after the U.S. response to Houthis attacks in Jordan. Another uncertainty was the suspension of authorization of new liquefication devices in the U.S.A. A weekend break might calm down the rising stress among investors.
As UPI dropped, let’s start with the decliners as they played stronger. After a quarterly regular rebalance, we use US data for Cool Company (NYSE/OSE: CLCO) instead of the Oslo Stock Exchange. This company lost 9.2% on the NYSE, the most significant decline of companies we monitor. Its weekly chart looks quite dramatic, but daily data shows closing on December´s low price. CLCO will announce its Q4-23 results on February 28, so this did not start the decline. Also, other US-listed constituents declined: Flex LNG (NYSE/OSE) lost 5.8%, mainly on Friday´s gap. Golar LNG (NASDAQ: GLNG) lost 5.1% but started the week´s decline on Wednesday. Both companies move in a range, so despite their high losses, they didn´t change the overall picture. FLNG set the earning call on February 7, and it will be interesting to hear some details about new charters, as the one for Flex Resolute was prolonged and Flex Constellation was not. Declining spot/charter rates are a big theme for investors now as the stress from spot vessels overwhelmingly rises. We think the decline is mainly done by the end of winter.
Qatar´s Nakilat (QSE: QGTS) lost 4.9% and started a correction of a previous rise. New Fortress Energy (NASDAQ: NFE) lost just 0.1% less but continued to decline after a last one-week correction. NFE came back to the range three weeks ago. Excelerate Energy (NASDAQ: EE) lost 4.4% and vanished the previous week’s growth.
Japanese shipping trio – NYK Line (TSE: 9101), MOL (TSE: 9104) and “K” Line (TSE: 9107) lost only slightly, but prices were refused for the third time on new highs. Price ranges were minimal, but traded volume was mostly above average. That points to a struggle between buyers and sellers.
Another trio of US-listed gas and oil drillers – BP (NYSE: BP), Chevron (NYSE: Chevron) and Shell (NYSE: SHEL) – closed in their ranges. That is the only point they have in common: BP lost 2.8%, CVX gained 2.1%, and SHEL gained 0.2% after its growth was pushed back.
Capital Product Partners (NASDAQ: CPLP) announced its results on Friday, pushing its price from a red opening gap to a 0.5% weekly gain. Here, contrary to Japanese shippers, sellers were diminished by buyers.
In summary, the volatility of LNG shippers’ stocks is rising. Some stressors are primarily seasonal, like declining rates. The others, like concerns over a surplus of unchartered new buildings, are supported by the actions of the Biden administration – both on the Middle East and LNG infrastructure in the homeland. On the other hand, pressure on rates should rejuvenate the world’s fleet of LNG carriers.
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