Summary
The UP World LNG Shipping Index fell 1.98% to 167.15 points, underperforming the S&P 500’s 1.63% decline. Eight companies grew while thirteen weakened, with pure LNG shippers generally outperforming diversified players. The week was dominated by earnings releases showing mixed results—Golar LNG suffered the most significant loss at over 6%, while Excelerate Energy led gainers with 6.4% growth. The index has returned to its previous trading range after rejecting the late-summer rise, with firm support in place. Short-term volatility is expected among constituents, though the long-term outlook remains positive, driven by burgeoning LNG demand and potential new contracts.
UPI & SPX
The UP World LNG Shipping Index, which tracks listed LNG shipping companies, lost 3.38 points (1.98%), closing at 167.15 points, while the S&P 500 index lost 1.63%. The chart below illustrates the performance of both indices with weekly data.
Broader View
On October 31, another regular UPI rebalancing occurred, with no companies being added or removed. Their weighting changed due to changes in the fleet and the number of issued and free-float shares.
The UPI did not stay above 170 points for long. While eight companies grew, thirteen weakened. Those with a broader product portfolio lost the most, while pure LNG shippers tended to increase their market share. However, the most significant influence was the publication of economic results and overall market sentiment.
The median movement was -1.41%, and the traded volume remains above average.
Constituents
Golar LNG (NYQ: GLNG) suffered the most significant loss, wiping out the growth gap from the previous week. Its revenues increased compared to the second quarter, mainly due to the commissioning of FLNG GIMI. Nevertheless, analysts are concerned about rising costs and lower revenues. From a technical analysis perspective, the share price is moving sideways.
COSCO Shipping Energy Transport (SS: 600026) lost 6%, but still maintains an upward trend. It is followed closely by NYK Line (TSE: 9101), which lost 5.65%. The decline could have been deeper, and it even fell below support during the week, but the price managed to stay above it. The other two Japanese companies experienced a similar trend, with the price finding itself close to a key support level. However, their prices always remained above the support level. “K” Line (TSE: 9107) lost 4.3% and MOL (TSE: 9104) fell 2.6%. All three Japanese companies reported results that were worse overall than in the same quarter of the previous year.
Another Asian company, Korea Line Corporation (KRX: 005880), also lost nearly 5%. Its decline was also due to a year-on-year deterioration in its financial results. According to TA, it rebounded from the resistance we wrote about last week and continues to move sideways.
Capital Clean Energy Carriers (NYSE: CCEC) also reported worse results than it did a year ago. The company continues its transformation into a multi-gas carrier, having sold two of its container ships. However, it also lost three per cent, reaching its support level.
Excelerate Energy (NYQ: EE) and Nakilat (QSE: QGTS) stand out among the growing companies. Excelerate Energy showed the highest growth, at 6.4%, but this increase was significantly higher during the week. The weekly performance thus ended below resistance, and the growth did not succeed (yet?). Nakilat grew by 5.24%. Although the rebound from support did not result in a return to a higher price level, this could occur in the coming weeks.
BP (NYSE: BP) achieved a notable breakthrough past its resistance level with a 4.1% increase. Shell (NYSE: SHEL) may be preparing for something similar, as it has been above resistance for the third consecutive week, having corrected slightly the week before and ending the last week with a 0.9% increase, thereby averting an attempt to return below the aforementioned broken resistance. Chevron (NYSE: CVX) also averted a deeper decline but closed with a loss of 1.7%.
New Fortress Energy (NYQ: NFE) showed nice growth of 3.9% compared to other companies, but within the 10% movements that are now common for it, this is almost nothing, especially when we take into account the rejection of higher prices during the week.
Flex LNG (NYSE: FLNG) rose 2.2% ahead of its earnings release, moving towards resistance at $27.5.
Tsakos Energy Navigation (NYSE: TEN) is also worth mentioning, as TA indicates a continuation of the growth trend, which is somewhat obscured by the weekly growth rate of 1.1% alone.
Crystal Ball
The late-summer rise was rejected, and UPI returned to its previous range, where it now trades. This area provides firm support. In the short term, we estimate a rise in volatility of UPI´s constituents.
Our outlook remains steadfastly positive in the long term. The burgeoning demand for LNG, bolstered by situational or management-driven actions and the potential for new long-term contracts, paints a promising picture. Investors should watch policy developments, market competition, and upcoming corporate earnings for further direction.
About UPI
Established in 2020, the UP World LNG Shipping Index is a rules-based stock index family designed to measure the performance of publicly traded companies worldwide involved in the maritime transportation of liquefied natural gas (LNG). This unique index encompasses 21 companies and partnerships worldwide, representing over 65% of the world’s LNG carrier fleet as of 2020. The UP Index provides premium services, offering freemium and trial access to charts. With Freemium, users can access the basic UPI vs. S&P 500 chart after completing an email registration. The trial includes full access for fourteen days.
Final Note
This report primarily relies on technical analysis using weekly data.