PETALING JAYA: The outlook for liquefied natural gas (LNG) carriers in the near term is expected to remain weak with rates having plummeted by nearly 90% year-on-year (y-o-y) according to UOB Kay Hian (UOBKH) Research.
“Tanker rates may remain depressed due to Trump Tariff 2.0, which may also impact the petroleum segment, although tankers, especially MISC Bhd
’s Aframaxes may demonstrate resilience,” the research house said in a note to clients.
According to UOBKH Research, the unexpected decision by the Organisation of the Petroleum Exporting Countries and allies or Opec+ to accelerate output ramp up had prompted Brent crude prices to decline to about US$65 per barrel.
“While this might be positive on tanker demand, we note that global crude loadings for January to February were down by 4.8% y-o-y. The world’s top seaborne crude importer China saw volumes decline by 7.6% y-o-y or about 22% of global trade,” it said.
The research house said unlike the previous tariff rounds which reshuffled trading patterns but volumes continued to grow, a full-blown Trump 2.0 scenario may lead to a recession and dip in ocean volumes.
This may result in some volatility in tanker rates as the revised fee structure by the US Trade Representative affects Chinese-built ships.
“If any, MISC’s exposure is limited to a new dual-fuel Aframax and six very large ethane carriers. Aframax-class vessels appear to be most shielded for now.”
UOBKH Research said global shipments of LNG had not recorded y-o-y growth in 2024 and in 1Q25 the growth was only 2.6%.
The United States is the world’s largest LNG exporter, recording a 15% growth in 1Q25 volumes.
However, LNG carrier rates plummeted by up to 90% in February as continuous deliveries in carrier newbuilds against delays in new LNG liquefaction capacity startups led to an illusion of a carrier oversupply.
The research house said MISC floating production, storage and offloading (FPSO) vessel Bunga Kertas sailed away and redeployment seemed to be on track.
“The legendary 40-year old FPSO is also MISC’s first foray into the offshore production market.
“However, the fields halted production since the first half of 2022 due to a lack of maintenance works on the adjacent infrastructure and absence of required surveys to ensure the FPSO’s hull integrity.
“A safety incident related to a diver during the repair process had subsequently led to the FPSO’s demobilisation in 2023” UOBKH Research explained.
Since then, MISC had undertaken an extensive FPSO repair and life extension, alongside conversion works into a floating oil storage (FSO) facility.
“Spanning about 1½ years, it was a notably complex conversion project given the FPSO’s age.
“We understand that the FSO is approaching sail away to replace the demobilised FSO Benchamas for Chevron in Thailand and by the second half of 2026, it is expected to return to Jadestone for hire.”
The research house is retaining its earnings forecasts pending clarity on the group’s FPSO Mero-3’s sustainable quarterly earnings.
MISC’s plans for an ambitious 50% growth in operating cash flow by 2030 hinged on securing long-term recurring income stream, added the research house.
