Summary
LNG shipping stocks were little changed last week, with the UP World LNG Shipping Index (UPI) inching up 0.08% to 168.11 points, holding just below long-term resistance. Trading volume eased and sentiment remained fragile, with short-term nervousness stemming from geopolitical uncertainty. Still, seasonal demand patterns suggest that there will be eventual upward pressure. Among constituents, ADNOC LS stood out with a 9.3% gain, returning to levels last seen in January, while Japan’s “K” Line broke through resistance in a modest but significant 2.1% rise. Mitsui O.S.K. Lines and NYK Line added 0.9% each, alongside small gains for Exmar, Awilco LNG, and Cool Company. On the downside, New Fortress Energy plunged 15.3% on delayed results and weaker revenues, while Capital Clean Energy Carriers slid 10.2%. Korea Line, Dynagas LNG Partners, and Cosco Shipping Energy also softened near their support levels. Overall, the sector remains in a holding pattern, awaiting a decisive move above or away from the resistance.
UPI & SPX
The UP World LNG Shipping Index, which tracks listed LNG shipping companies, gained 0.14 points (0.08%), closing at 168.11 points, while the S&P 500 index gained 0.94%. The chart below illustrates the performance of both indices with weekly data.
Broader view
The UPI is currently just below its long-term resistance level, as indicated by a decrease in trading volume. The ratio of rising to falling companies is 11 to 4, suggesting that adverse movements are outpacing positive ones. It is challenging to determine which regions are experiencing gains or losses, as the overall market forces appear to be balanced.
However, consistent movement below resistance cannot continue indefinitely; there will either be a breakthrough or a rebound. Which scenario is more likely? From a seasonal consumption perspective, growth should take precedence. However, uncertainty stemming from geopolitical factors could create downward pressure. We anticipate increased nervousness in the short term; nevertheless, we believe that seasonality will ultimately prevail.
Constituents
Newcomer ADNOC LS (ADX: ADNOC) continues to show significant growth, increasing by 9.28%. The price has now returned to the range from which it fell in January this year, roughly between 5.30 dirhams and 5.90 dirhams. This range provides ample breathing space and a certain degree of security.
The second-largest growth last week was achieved by the Japanese company “K” Line (TSE: 9107), which rose by 2.1%. While this growth may seem minor, it is crucial because it indicates that the resistance level has been broken, allowing the price to reach levels not seen since the beginning of the year. The weekly chart shows that “K” Line has been moving sideways since the start of 2024, with its highest price around 2,700 yen and a drop to the 2,000 yen level, which has since formed a support level. The price has fluctuated between this support and around 2,150 yen, having risen above this level only three times—last week marked the third attempt. However, the trading volume was below average, which has not generated much enthusiasm so far.
The two remaining Japanese companies, Mitsui O.S.K. Lines (TSE: 9104) and NYK Line (TSE: 9101), both reported a 0.9% growth. While Mitsui O.S.K. Lines continues to rise from its support level, NYK Line is moving indecisively around its support level.
Exmar (BSE: EXM), Awilco LNG (OSE: ALNG), and Cool Company (NYSE/OSE: CLCO) also experienced increases of over 1%. Although Exmar lost ground during the week, its share price closed 2% higher than the previous closing price. Awilco LNG is holding steady at the level it reached three weeks ago, allowing us to discuss a growth trend still. Meanwhile, Cool Company has been moving indecisively for the tenth consecutive week, with candlestick chart shadows and wicks indicating a tug-of-war over the direction of future development.
New Fortress Energy (NYSE: NFE) experienced the most significant decline, announcing a delay in publishing its quarterly results. The company reported a substantial decrease in revenue from terminal operations for both the three- and six-month periods ended June 30, compared to the same periods in the previous year. As a result, the share price fell by 15.3%, bringing it close to its historic lows.
Capital Clean Energy Carriers (NYSE: CCEC) also faced a sharp decline of 10.2%. Trading volume was below average, and the specific cause of this decline remains unclear. The company released its quarterly results on July 31 but did not issue any new reports.
Three companies are currently testing the strength of their support levels: Korea Line Corporation (KRX: 005880), Dynagas LNG Partners (NYSE: DLNG), and Cosco Shipping Energy (SS: 600026)—all three experienced declines ranging from approximately 1.4% to 2.2%.
Flex LNG (NYSE/OSE: FLNG) has corrected its earlier strong growth and is now evaluating its next steps. If the upward trend continues, it could potentially surpass the $30 mark.
Overall, the situation for these companies appears fragile, with significant nervousness stemming primarily from non-market forces.
Crystal Ball
Despite the growing global uncertainty caused by the US administration, our outlook remains optimistic. However, we expect increased volatility in the coming weeks. LNG spot rates rise, but the impact remains marginal for most UPI constituents. The market is watching for potential breakouts at key resistance levels, which could determine the next direction of prices.
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 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