Summary
The UP World LNG Shipping Index (UPI) has recently shown a mixed performance, reflecting market uncertainty. While low spot rates weigh on investor sentiment, longer-term positives, such as robust Time Charter Equivalent rates, provide stability. Weekly movements were modest, with some companies like NYK Line and Mitsui O.S.K. Lines recording gains, while others showed mixed or corrective trends. Despite a cautious short-term outlook due to broader market challenges, the industry anticipates positive long-term changes, including adjustments like retiring steam vessels.
UPI & SPX
Last week, the UP World LNG Shipping Index (UPI), which tracks listed LNG shipping companies, gained 1.21 points, equivalent to 0.74%, closing at 163.69 points. The S&P 500 index lost 0.6%. The chart below illustrates the performance of both indices with weekly data.
Broader view
The UPI continues to move sideways, hovering around the MA40 long-term moving average (equivalent to the 200-day average). The shorter MA10 moving average (equivalent to the 50-day moving average) is nearing it from above. The situation is, therefore, unclear, with negative features such as low spot rates dominating the perception in our view. These negative factors are now perceived as more important than the long-term and positive ones. The positive aspects include high rates of TCE (Time Charter Equivalent) companies that have contracted for most of their ships.
Constituents
The past week has been quiet in its development. The resulting movements were below average—as was the volume traded—and were mostly around and below the two per cent mark. This week, stock options will regularly expire, which may cause exchange rate movements.
As the UPI rose, we began by reviewing the rising companies.
Japan’s NYK Line (TSE: 9101) gained the most, rising 5.2 per cent. It was followed by bp (NYSE: BP), which added 4.5%. Despite being a positive weekly development, NYK has been moving sideways for over half a year, and BP has corrected the downtrend.
Incidentally, Korea Line Corporation’s 4.1% gain isn’t quite what it seems either, as the opening price was well below the previous week’s closing price, and the weekly rise was enough to return to broken support.
The 3.6% rise for Mitsui O.S.K. Lines (TSE: 9104) is more significant as it has likely ended the upward trend correction and initiated its next phase to the upside.
New Fortress Energy (NASDAQ: NFE) rose by 3.1%, but the result is a long shadow and a short body, which are signs of a possible correction. In this case, it would be the first correction of a new uptrend, a positive thing. The key will be to keep the exchange rate above $9.
“K” Line (TSE: 9107) has added 2.7% but is also moving sideways and awaiting direction.
The development of Golar LNG (NASDAQ: GLNG) and Excelerate Energy (NASDAQ: EE), two of the three companies pushing the UPI’s growth side in recent weeks, is still up. Both companies successfully fended downside efforts and closed higher than in previous weeks. Their growth was 2.4% and 1.7%, respectively. We can also add Capital Clean Energy Carriers (NASDAQ: CCEC) to this group, testing new growth opportunities with a 2.3% gain. While that hasn’t happened yet – the company is moving sideways – the shape of the candle with the longer lower shadow and minor growing body points to that possibility.
Dynagas LNG Partners (NYSE: DLNG) gained 2.2%, but even here, the stock has been going sideways for a few weeks, albeit at its highest levels since the 2018 crash. Flex LNG (NYSE/OSE: FLNG) gained 1.6%. This corrected the prior decline after breaking through long-term support at $25. More upside was rejected, but the preceding low was maintained.
There were few declining companies, and the losses were not high or trend-setting. Awilco LNG (OSE: ALNG), after halting its decline, has now lost 3.2%, but on half the volume of the average. Cool Company (NYSE/OSE: CLCO) wrote off 2.1%, but there were efforts to move in both directions. Tsakos Energy Navigation (NYSE: TSE) shares have followed a similar pattern.
Crystal Ball
Our outlook remains unchanged and is more negative for the rest of the year. If there is a crossover between the UPI and/or the moving averages, there could be a more significant decline in the UPI. Of course, this negative assessment is mainly due to the short-term view of investors (or our reading of the candlestick charts), for whom spot rates are harmful, and plenty of attractive opportunities outside the sector exist. Our long-term view is positive, and we expect situationally driven actions, such as the scrapping of steam-powered vessels, to strengthen the industry and companies in the UPI.
About UPI
Established in 2020, the UP World LNG Shipping Index is a rules-based stock index family designed to measure the performance of worldwide publicly traded companies involved in the maritime transport of liquefied natural gas (LNG). This unique index covers 19 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 email registration. The trial includes full access for fourteen days.
Source: UP-Indices.com via LNGshippingStocks.com