LNG Bunker Volatility Drives Up Dirty Tanker Freight Rates

Bunker price volatility significantly influenced higher freight rates for LNG-fueled dirty tankers from 31 August to 4 September, according to analysis by Hellenic Shipping News Worldwide. This effect was observed across benchmark routes, resulting in higher rates compared to conventional tanker freight values.

Platts Base Rates for LNG-fueled tankers, provided by S&P Global Energy, track freight costs in $/metric ton and indicate how LNG bunker economics affect voyage costs relative to conventional markets. These rates monitor dirty tanker benchmark routes, including Persian Gulf-China, UK Continent-UK Continent, and West Africa-UK Continent, across three basket routes.

Freight Rate Movements

Within the Persian Gulf-China basket routes, the Basrah-Ningbo route saw a notable increase in LNG base rates, climbing to $34.10/mt by 4 September from $33.47/mt on 31 August. This was accompanied by a rise in the Worldscale point from WS645 to WS690 over the same period. The LNG-equivalent freight value for this route increased by approximately 9% over the week, reaching $235.29/mt from nearly $215.88/mt.

In comparison, an LNG-equivalent freight metric normalises calculations by applying the prevailing Worldscale level to the LNG-fueled vessel’s daily freight component. For instance, on 2 September, the Ras Tanura-Dalian route showed an LNG-equivalent freight of approximately $233.57/mt. This calculation indicated a 70% spread between LNG-equivalent and conventional freight costs, with conventional freight on that route standing at $137.21/mt on the same date.

West Africa-UKC Outperforms

West Africa-UK Continent (WAF-UKC) trades registered the sharpest increase in LNG-equivalent freight during the week. The daily LNG-equivalent freight on the Bonny-Rotterdam route rose from $52.06/mt on 1 September to $70.12/mt on 4 September, marking a nearly 35% increase. This contrasts with an 8.71% increase in conventional freight over the same period. By 4 September, the LNG freight equivalent versus conventional freight spread reached 63% on this route, representing the widest spread across the assessed basket routes.

Bunker Price Influences

This trend occurred against a backdrop of significantly higher LNG bunker prices during the week. Singapore LNG bunker prices increased by approximately $62/mt, rising to $1,399/mt on 2 September from $1,337/mt on 31 August, before easing to $1,377/mt by 4 September. Rotterdam LNG bunker prices followed a similar pattern, quoted around $1,402/mt on 2 September before easing to $1,383/mt on 4 September. The price increases were linked to stronger Dutch TTF gas prices and heightened geopolitical tensions in the Middle East.

Platts analysis indicates that while conventional freight values reflect underlying tanker supply-demand fundamentals, LNG-equivalent freight additionally incorporates bunker-price exposure. This transparent measure helps market participants evaluate vessel selection, voyage economics, and the competitiveness of dual-fuel tonnage in dirty tanker trades. The findings suggest that LNG bunker-adjusted dirty tanker freight economics were mixed during the week ending 4 September, with Middle East-to-China routes strengthening considerably, while Atlantic Basin routes remained largely stable.