With rapidly increasing demand for liquefied natural gas, demand for newbuilding LNG carriers is also booming these days. However, many analysts believe there will be a lot of ships lying idle when the bubble bursts some three years later.
Today, global demand for LNG is skyrocketing and the demand for LNG newbuildings is rising as well. In 2012, South Korea's Big4 shipbuilders - Hyundai Heavy Industries, Samsung HI, Daewoo Shipbuilding & Marine Engineering and STX Offshore & Shipbuilding - have all successfully contracted for LNG carriers.
Also, day rates of LNG carrier have soared to a peak of $160,000 in 2011 from $37,000 in 2010. The US' Investment U Research forecast that this year's rates will go as high as $200,000 per day and stand at an average around $140,000.
The utilization proportion of the existing global fleet of 365 LNG carriers reaches 98% and Clarksons say usage is not likely to fall below that level until 2015.
From five LNG carriers on order in 2010, there are now more than 70, and over 100 more seem to be built by 2017.
But last September, Wood Mackenzie warned against this building boom. "While near-term prospects remain good, the danger is that ships ordered in today's rising market are likely to be delivered into a declining freight market in 2014-2015," it pointed out.
It warned the risk of speculative orders, saying that ships ordered now have no guarantee that new LNG projects will choose to charter these vessels rather than order their own purpose-built ships.
Recently, short-to-medium term deals of less than three years are being quoted around $150,000 per day, while longer-term charter rates of over five years stand at about only $80,000 a day.