Summary
The UP World LNG Shipping Index (UPI) increased by 0.85% to 172.14 points, moving further above the important 170 mark and coming within six points of its all-time high. Growth was led by smaller-weighted companies such as COSCO Shipping Energy (+9.1%), SM Korea Line (+6.7%), and Awilco LNG, which is recovering from earlier setbacks.
On the downside, Golar LNG dropped 8% after unwinding pressure, Nakilat decreased by 1.1%, and Capital Clean Energy Carriers fell 5.6% and is below its support. The biggest shock came from New Fortress Energy, plunging 46.5% on weak results. Oil majors diverged, with Chevron rising while BP and Shell retreated.
Overall, the index’s rise indicates sector maturity: although headline growth has slowed compared to previous surges, resilience above 170 points suggests a stable foundation. Short-term volatility may still happen, but the long-term outlook remains positive due to increasing demand, global fleet renewal, and upcoming new liquefaction capacities.
UPI & SPX
The UP World LNG Shipping Index, which tracks listed LNG shipping companies, gained 1.45 points (0.85%), closing at 172.14 points, while the S&P 500 index gained 1.59%. The chart below illustrates the performance of both indices with weekly data.
Broader view
UPI continues to grow and has recently surpassed the 170-point mark, now just six points away from its all-time high. However, the strong movements observed in the past have given way to slower progress in the present. There are two key reasons for this shift:
1) Companies with lower weight in the UPI are currently driving growth.
2) The LNG maritime transport sector has matured and developed significantly.
We will go into more detail about the first point in the section discussing individual companies. It’s worth noting that we frequently address the second point. In summary, the LNG sector has evolved into a globally reliable supply chain. This evolution has led to a time lag between the supply of LNG tankers and the demand for completed liquefaction terminals, allowing for a generational change in the fleet. Additionally, we would like to revisit our spring idea regarding the increase in short-term contracts at the expense of long-term contracts.
Constituents
The two companies with a maximum weight of 20% from UPI – Nakilat (QSE: QGTS) and Golar LNG (NYQ: GLNG) declined last week. Nakilat decreased by 1.1% and is still seeking direction, although it appears to be flirting with a decline. GLNG resolved its three-week overpressure with an 8% decline and is back above its summer support.
However, New Fortress Energy (NYQ: NFE) experienced the most significant drop, falling 46.5% after poor quarterly results.
On the other hand, COSCO SHIPPING Energy Transportation (SS: 600026) rose the most, by 9.1%. It may have started a new growth phase by overcoming resistance. Increased trading volume supports this.
SM Korea Line Corporation (KRX: 005880) continues its growth trend, rising 6.7% after corrections and entering the next stage in the 1-2-3 pattern.
Similarly, but more subtly, Awilco LNG (OSE: ALNG) is also expanding after suffering from the cancellation of a long-term contract and low spot rates for one of its two ships.
However, investors seem to have become accustomed to the low rates and believe in a sector recovery. This might be due to the upcoming winter, or more likely due to the decommissioning of older tankers and, above all, the imminent commissioning of new liquefaction terminals. After all, 2025 is gradually coming to an end.
Cool Company (NYSE/OSE: CLCO) is another firm where investors see a brighter future. April’s low share prices of less than $5 are now a thing of the past, as the current price is just under $8. However, last week’s 4.8% increase was a correction of the decline and did not lead to higher prices.
NYK Line (TSE: 9101) and “K” Line (TSE: 9107) maintained prices above the levels from the week before last, continuing to break through resistance, although NYK increased by only 0.3% and “K” rose by 0.6%. Both thus sustain hope for another attempt at growth. Tsakos Energy Navigation (NYSE: TEN) is acting similarly, although here too the uptrend started in April after a decline lasting around a year.
Dynagas LNG Partners (NYSE: DLNG) also jumped above resistance after its quarterly results, rising 2.4% on slightly higher volume.
Of the oil and gas production trio, only Chevron (NYSE: CVX) managed to grow, thereby sustaining its growth trend. It increased by 2.2%.
Excelerate Energy (NYQ: EE) avoided another attempt to break through support and is gaining momentum to test the opposite direction.
MISC (KLSE: 3816) avoided a more severe decline and a significant breach of support, although it dropped by 0.9%. Flex LNG (NYSE: FLNG) is beginning its first week without a listing on the Oslo Stock Exchange. While we understand the motivation driven by trading conditions, the European and, for FLNG, domestic stock exchanges could have served as a safety net amidst changing geopolitical circumstances. However, European stock exchanges are not equipped for this in terms of the range of instruments (and the volumes mentioned). Nevertheless, FLNG has likely finished its post-dividend correction, falling 2.1% last week, although the price was even lower during the week.
Capital Clean Energy Carriers (NYSE: CCEC) reported weekly growth, but it dropped 5.6% during the week and fell below its support level. An attempt at a comeback was repelled.
Crystal Ball
Our outlook remains optimistic. The sector has matured, has become indispensable to the global energy mix, and is robust. Additionally, we have noted the influence of seasonality, which is another essential factor to consider.
We identify the primary risks associated with non-market geopolitical forces. Increasing the threshold for accepting the use of force to resolve conflicts can quickly change current perceptions. Wars are becoming more acceptable. In this context, it is helpful to analyse the long-term shipping routes of each fleet.
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 covers 21 companies and partnerships worldwide, representing over 65% of the world’s LNG carrier fleet in 2020. The UP Index offers premium services with 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.