Demand for LNG marine transport is widely expected to grow rapidly in the course of next 10 years along with an expansion of LNG market. However, LNG market is expanding quantitatively but at the same time undergoing a significant qualitative change, which is a trend of commoditization. It will invoke a world-wide movement of optimizing LNG trade routes, which will bring in huge volatility to tonnage demand. According to our estimate, the impact of the optimization could theoretically halve the demand for new built vessels up to 2025 when it fully worked. This, together with potential upward pressure caused by surge of arbitrage or some unpredictable events, is making the forecast of tonnage demand more uncertain. Commoditization of LNG is also impacting the tonnage market to increase portion of short-term charter contracts. The expanding short-term charter market will be highly dependent on the volatility which is created not only by supply/demand itself but also by the above mentioned trade optimization. Spot charter market, which is currently at a historical low after a number of new entries to the market and speculative orders for new-builds, may gradually recover to a better level as LNG trade grows, but may be impossible for all the existing players to co-exist under such new state of competition. It will have to go through a process of selection, and only a limited number of players with certain abilities would be able to survive the competition.
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