Platts introduces LNG-fuel vessels based TCE

S&P Global Platts, an independent energy markets information provider, has launched time charter equivalent (TCE) assessments for Newcastlemax class dry bulk ships using LNG as bunker fuel.

This launch comes because of growing efforts by the shipping industry to use clean fuel to reduce GHG emissions.

The TCE assessments are for 209,000 dwt Newcastlemax class dry bulk ships using LNG on six key routes and a tonne-mile weighted average index NMAX GT4. This is effective 3 February 2022.

A study that SEA-LNG and SGMF commissioned showed that using LNG as a marine fuel could help cut GHG emissions by 21 per cent compared with oil-based marine fuels over the entire life cycle of a commodity cargo. The use of LNG curtails pollutants such as sulfur oxide (SOx), nitrogen oxide (NOx) and particulate matters.

Peter Norfolk, editorial director at Platts said: “Newbuilding orders for LNG-fueled vessels are growing and LNG bunkering facilities are increasing at a frenetic pace. Initiatives such as The Sea Cargo Charter are pushing owners to embrace decarbonization and sustainability. The market needs freight assessments based on alternative fuels; hence we are delighted to launch the world’s first LNG-fueled dry bulk index and TCE assessments.”

NMAX GT4 is the dry bulk freight market’s first alternative-fuel-based weighted average index capturing the global trade on Newcastlemax bulkers.

Presently, there are 20 LNG-powered Newcastlemaxes on order. In addition, several shipowners are considering the purchase of this class of LNG-fueled bulkers in the future.

Two LNG-powered Capesize vessels are currently in operation, while the first of the larger Newcastlemax class ships will be commissioned during early 2022.

Moreover, there are currently 141 ports that offer LNG bunkering globally.

The LNG-fuel-based TCEs offer participants the option of either a basket of routes via the Index or individual TCEs. The NMAX GT4 on 3 February is at $3.440/day and on 4 February at $1.305/day.

Platts says the new assessments enhance its dry bulk freight market offering and complement the earlier launches.

The index is based on an allocated weighting to the daily TCE assessments of four key voyages. Weighting for the individual TCE assessments is determined by the volume of Newcastlemax/Capesize vessel movements observed between the regions associated with the respective voyages over 1 January 2017 to 31 December 2019, from Platts’ vessel tracking trade flow software cFlow. This ensures the correct weighted average is applied to the index.

Platts cFlow is used to observe the actual trade flow on Newcastlemax/Capesize vessels and to calculate tonne-mile demand. Tonne-mile demand is calculated by multiplying the volume of cargo moved in metric tonnes by distance traveled in miles. Platts Newcastlemax TCE assessments ($/day) are derived from related Capesize voyage charter prices ($/mt).

The routes were selected based on extensive market engagement around the world including ship owners, charterers, and ship brokers.