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Shipowners speed up newbuilding orders with gas carriers leading the way

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Newbuilding contracting activity is picking up pace with ship owners’ buying interest continuing to focus on gas carriers and more specifically LNG units, according to Allied Shipbroking.

In its latest weekly report, the Greek-based broker said that it sees a flow of orders being made on behalf of the major Qatar LNG Project that is in the works. “It seems that the good feeling that exists for this sector, the positive freight rates as well as the desire to secure energy supply amidst the current global energy crisis that has emerged has increased investor appetite for these projects and in turn the number newbuilding projects that are taking shape.”

Allied Shipbroking has also seen a strong buying appetite hold for containership units, “as earnings are still holding at record highs, while despite the lacklustre earnings performance noted in tankers, the recent freight market recovery has triggered an increase in buying interest and a fair flow of new orders this past week.”

Meanwhile LNG shipping stocks are proving resilient amid the sell-off in the broader equity market, according to global maritime advisory and research organisation Drewry. Drewry’s LNG shipping equity index increased by 12.7% YTD as of 28 June 2022, outperforming S&P 500 which declined by 19.8% during the same period.

Golar LNG stock price surged the most (up 87.9%), Flex LNG increased by 24.8% while Nakilat by +18.2.%.
LNG stocks have mainly benefited from the rising European LNG demand as the region tries to wean away from Russian natural gas amid the ongoing geopolitical crisis caused by the Russia-Ukraine conflict.

Drewry expects earnings of LNG shipping companies to benefit from positive LNG shipping prospects in the coming quarters. “Given the tight LNG shipping prospects and LNG stocks’ resilience thus far, we believe investors can consider adding LNG shipping stocks to their portfolio. We prefer companies with solid revenues, young fleet and healthy balance sheet.”